PRINTER'S NO. 582
No. 558 Session of 1999
INTRODUCED BY TRICH, MARKOSEK, TANGRETTI, COY, PRESTON, TRELLO,
SAINATO, VAN HORNE, DeLUCA, STEELMAN, McCALL, STABACK,
ROBINSON, HARHAI AND L. I. COHEN, FEBRUARY 10, 1999
REFERRED TO COMMITTEE ON COMMERCE AND ECONOMIC DEVELOPMENT,
FEBRUARY 10, 1999
AN ACT
1 Amending the act of December 1, 1959 (P.L.1647, No.606),
2 entitled "An act to provide for the incorporation of Business
3 Development Credit Corporations to assist, promote,
4 encourage, develop and advance the business prosperity and
5 economic welfare of the Commonwealth; defining the powers,
6 restrictions, limitations, purposes and functions of such
7 corporations; conferring powers on certain corporations and
8 financial institutions in connection therewith, and
9 conferring certain powers on the Department of Banking,"
10 further providing for loans by financial institutions.
11 The General Assembly of the Commonwealth of Pennsylvania
12 hereby enacts as follows:
13 Section 1. Section 6(2) of the act of December 1, 1959
14 (P.L.1647, No.606), known as the Business Development Credit
15 Corporation Law, amended July 2, 1965 (P.L.171, No.108), is
16 amended to read:
17 Section 6. Loans by Financial Institutions.--
18 * * *
19 (2) The financial institution, which is a party to a lending
20 agreement, shall lend funds to a corporation as and when called
21 upon by it to do so, but, except as hereinafter provided in
1 subsection (3) of this section 6, the total amount on loan by
2 any such financial institution to a corporation at any one time
3 shall not exceed the following limit to be determined as of the
4 effective date of the lending agreement. Moreover, such amount
5 shall thereafter be readjusted, annually, in the event of any
6 change in the base of the loan limit of such financial
7 institution, which is as follows:
8 (a) National banking association, State-chartered bank, bank
9 and trust company, savings bank, private bank or credit union,
10 four per centum of capital and surplus, and the aggregate amount
11 on loan to all such corporations shall not exceed twelve per
12 centum of capital and surplus.
13 (b) Federal savings and loan association or building and
14 loan association, four per centum of its undivided profits and
15 general reserve funds, and the aggregate amount on loan to all
16 such corporations shall not exceed twelve per centum of its
17 undivided profits and general reserve funds.
18 (c) Stock insurance company, four per centum of capital and
19 surplus, and the aggregate amount on loan to all such
20 corporations shall not exceed twelve per centum of capital and
21 surplus.
22 (d) Surety and casualty company, four per centum of capital
23 and surplus, and the aggregate amount on loan to all such
24 corporations shall not exceed twelve per centum of capital and
25 surplus.
26 (e) Mutual insurance company, four per centum of guaranty
27 funds or of surplus, whichever is applicable, and the aggregate
28 amount on loan to all such corporations shall not exceed twelve
29 per centum of such guaranty funds or surplus, and
30 (f) Comparable limits for other financial institutions as
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1 established by the board of directors of a corporation, subject
2 to the approval of the Department of Banking. The total amount
3 on loan to a corporation by any financial institution which is a
4 party to a lending agreement shall not exceed, at any one time,
5 [one million one hundred thousand dollars ($1,100,000)] five
6 million dollars ($5,000,000). All loan limits shall be
7 established at the thousand dollars nearest to the amount
8 computed on an actual basis. All calls of funds which such
9 financial institutions are committed to lend to a corporation
10 shall be prorated by a corporation among the financial
11 institutions which are parties to its lending agreement in the
12 same proportion that the lending agreement commitment of each
13 bears to the aggregate lending agreement commitments of all
14 financial institutions of a corporation. Upon six months prior
15 written notice to the board of directors of a corporation, any
16 financial institution may withdraw from and terminate the
17 lending agreement effective at the end of such six month period
18 and after the effective date of withdrawal such financial
19 institution shall be free of obligation hereunder, except those
20 accrued or committed by the corporation prior to the effective
21 date of withdrawal.
22 (g) At no time shall the total obligations of any such
23 corporation exceed twenty times the amount of its paid-in
24 capital and surplus.
25 * * *
26 Section 2. This act shall take effect in 60 days.
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