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Resources for Credit Unions
Business Purpose Loan Guidelines
To establish Business Purpose Loan (BPL) underwriting and documentation standards.
A. Business Purpose Loan (BPL): Any loan or aggregate of loans incurred for the purpose of business, commercial or agricultural use in an amount less than $50,000.00.
B. Member Business Loan (MBL): Any loan or aggregate of loans incurred for the purpose of business, commercial or agricultural use in an amount equal to or greater than $50,000.00.
C. Applicable regulatory guidance: KDCU BPL guidelines apply to any loan or aggregate of loans in an amount less than $50,000.00. NCUA Rules and Regulations Part 723 applies to any loan or aggregate of loans at or above $50,000.00.
D. Business Purpose Loan distinguished from a Consumer Loan: A Business Purpose Loan is made for a business, commercial or agricultural use while a consumer loan is made for a personal, family or household use.
Consumer loans are generally made under the protections of the Uniform Consumer Credit Code and Federal Truth in Lending laws. Consumer protection laws do not generally extend to a Business Purpose Loan or a Member Business Loan unless the parties agree in writing to extend the protections to the loan.
The department recommends that credit unions granting BPLs use commercial lending documents which provide the credit union with greater flexibility regarding loan rates and collection procedures.
E. Policy Requirements
A Business Purpose Loan (BPL/MBL) Policy must be developed and adopted by the Board of Directors. It must specify at a minimum:
F. Underwriting Requirements
The next Credit Union Council Meeting is scheduled for September 25 at the Department of Credit Unions, 109 SW 9th Street, Suite 610, Topeka, KS 66612
|Department of Credit Unions 109 SW 9th Street Suite 610 Topeka, KS 66612 Phone: 785-296-3021 Fax: 785-296-6830 E-mail: firstname.lastname@example.org|