Idaho § 26-2120 - LIMIT ON LOAN AMOUNT - LOANS TO ONE BORROWER

§ 26-2120. LIMIT ON LOAN AMOUNT - LOANS TO ONE BORROWER

(1) Unless otherwise provided in this chapter or by a rule pursuant to this chapter, no loan may be made to any borrower if the loan would cause the borrower and any associated borrowers to be indebted to the credit union on all types of loans in an aggregated amount exceeding one hundred thousand dollars ($100,000) or fifteen percent (15%) of the net worth of the credit union, whichever is greater, without the approval of the director.

(a) This section does not apply to a corporate credit union.

(b) Two (2) borrowers are "associated" for the purposes of this section if any of the following factors are present:

(i) One (1) of them will derive a direct benefit from the credit union’s loan to the other. For this purpose, the term "direct benefit" means that the loan proceeds or assets purchased with those proceeds will be transferred to the other party other than in a bona fide arm’s-length transaction where the proceeds are used to acquire property, goods, or services;

(ii) Loan proceeds for each of them are used to purchase interests in the same enterprise, and the borrowers will in the aggregate own more than fifty percent (50%) of the ownership interests in such enterprise. In such case, the borrowers are considered associated only to the extent of the loans made to purchase interests in the same enterprise;

(iii) The borrowers are related directly or indirectly through common control and either borrower derives fifty percent (50%) or more of its income from the other. For this purpose, "control" means that a person directly or indirectly owns or has the power to vote twenty-five percent (25%) or more of the ownership interest of an organization, controls the election of a majority of the directors, managers, trustees, or other persons exercising similar functions of an organization, or has the power to exercise a controlling influence over the management or policies of the organization;

(iv) The expected source of repayment is the same for each borrower, and no individual borrower has a separate source of income from which the loan may be paid, taking into account the borrower’s other obligations; or

(v) One (1) borrower is generally liable for the obligations or actions of the other.

(2) The limit on a loan amount in this section does not apply to any loan that is fully secured by shares or deposits.

[26-2120, added 2020, ch. 230, sec. 8, p. 676; am. 2022, ch. 111, sec. 12, p. 376.]