State Codes and Statutes

Statutes > California > Fin > 22550-22551

FINANCIAL CODE
SECTION 22550-22551



22550.  Sections 22152, 22154, 22155, 22163, and 22164 do not apply
to any commercial loan of a bona fide principal amount of five
thousand dollars ($5,000) or more, or to a duly licensed finance
lender in connection with any such loan or loans, if the provisions
of this section are not used for the purpose of evading this
division.



22551.  In determining whether a loan is a loan of a bona fide
principal amount of the specified amount or more, the following
principles shall apply:
   (a) If a borrower applies for a loan in a bona fide principal
amount of less than the specified amount and a loan to that borrower
of a bona fide principal amount of the specified amount or more is
made by a licensed finance lender, no adequate economic reason for
the increase in the size of the loan exists, and by prearrangement or
understanding between the borrower and the licensee a substantial
payment is to be made upon the loan with the effect of reducing the
bona fide principal amount of the loan to less than the specified
amount within a short time after the making of the loan other than by
reason of a requirement that the loan be paid in substantially equal
periodical installments, then the loan shall not be deemed to be a
loan of the bona fide principal amount of the specified amount or
more.
   (b) A subsequent advance of money of less than a bona fide
principal amount of the specified amount pursuant to a revolving or
open-end loan agreement or similar agreement between a borrower and a
licensed finance lender which gives the borrower the right to draw
upon all or any part of the line of credit, or a loan agreement
providing for the making of advances to the borrower from time to
time up to an aggregate maximum amount which gives the borrower the
right to draw all or any part of the total amount, shall be deemed to
be a loan of a bona fide principal amount of the specified amount or
more if the line of credit or the aggregate maximum amount is a bona
fide principal amount of the specified amount or more and the
initial advance was a bona fide principal amount of the specified
amount or more even though the actual unpaid balance after the
advance or at any other time is less than a bona fide principal
amount of the specified amount.
   (c) If a loan made by a licensed finance lender has a bona fide
principal amount of the specified amount or more, the fact that the
transaction is in the form of a sale of accounts, chattel paper,
goods, or instruments, or a lease of goods, or in the form of an
advance on the purchase price of any of the foregoing, shall not be
deemed to affect the bona fides of the amount thereof.
   (d) For the purposes of this section, "the specified amount" means
five thousand dollars ($5,000).
   (e) For the purposes of determining whether the loan amount
exceeds a regulatory ceiling, the "bona fide principal amount" shall
not be comprised of any charges or any other fees or recompense
specified in Sections 22500, 22501, and 22601. Nothing in this
subdivision shall be construed to prevent those specified charges,
fees, and recompense that have been earned and remain unpaid in an
existing loan from being considered as part of the bona fide
principal amount of a new loan to refinance that existing loan,
provided the new loan is not made for the purpose of circumventing a
regulatory ceiling provision. This subdivision is intended to define
the meaning of "bona fide principal amount" as used in this division
solely for the purposes of determining whether the loan amount
exceeds a regulatory ceiling, and is not intended to affect the
meaning of "principal" for any other purpose.


State Codes and Statutes

Statutes > California > Fin > 22550-22551

FINANCIAL CODE
SECTION 22550-22551



22550.  Sections 22152, 22154, 22155, 22163, and 22164 do not apply
to any commercial loan of a bona fide principal amount of five
thousand dollars ($5,000) or more, or to a duly licensed finance
lender in connection with any such loan or loans, if the provisions
of this section are not used for the purpose of evading this
division.



22551.  In determining whether a loan is a loan of a bona fide
principal amount of the specified amount or more, the following
principles shall apply:
   (a) If a borrower applies for a loan in a bona fide principal
amount of less than the specified amount and a loan to that borrower
of a bona fide principal amount of the specified amount or more is
made by a licensed finance lender, no adequate economic reason for
the increase in the size of the loan exists, and by prearrangement or
understanding between the borrower and the licensee a substantial
payment is to be made upon the loan with the effect of reducing the
bona fide principal amount of the loan to less than the specified
amount within a short time after the making of the loan other than by
reason of a requirement that the loan be paid in substantially equal
periodical installments, then the loan shall not be deemed to be a
loan of the bona fide principal amount of the specified amount or
more.
   (b) A subsequent advance of money of less than a bona fide
principal amount of the specified amount pursuant to a revolving or
open-end loan agreement or similar agreement between a borrower and a
licensed finance lender which gives the borrower the right to draw
upon all or any part of the line of credit, or a loan agreement
providing for the making of advances to the borrower from time to
time up to an aggregate maximum amount which gives the borrower the
right to draw all or any part of the total amount, shall be deemed to
be a loan of a bona fide principal amount of the specified amount or
more if the line of credit or the aggregate maximum amount is a bona
fide principal amount of the specified amount or more and the
initial advance was a bona fide principal amount of the specified
amount or more even though the actual unpaid balance after the
advance or at any other time is less than a bona fide principal
amount of the specified amount.
   (c) If a loan made by a licensed finance lender has a bona fide
principal amount of the specified amount or more, the fact that the
transaction is in the form of a sale of accounts, chattel paper,
goods, or instruments, or a lease of goods, or in the form of an
advance on the purchase price of any of the foregoing, shall not be
deemed to affect the bona fides of the amount thereof.
   (d) For the purposes of this section, "the specified amount" means
five thousand dollars ($5,000).
   (e) For the purposes of determining whether the loan amount
exceeds a regulatory ceiling, the "bona fide principal amount" shall
not be comprised of any charges or any other fees or recompense
specified in Sections 22500, 22501, and 22601. Nothing in this
subdivision shall be construed to prevent those specified charges,
fees, and recompense that have been earned and remain unpaid in an
existing loan from being considered as part of the bona fide
principal amount of a new loan to refinance that existing loan,
provided the new loan is not made for the purpose of circumventing a
regulatory ceiling provision. This subdivision is intended to define
the meaning of "bona fide principal amount" as used in this division
solely for the purposes of determining whether the loan amount
exceeds a regulatory ceiling, and is not intended to affect the
meaning of "principal" for any other purpose.



State Codes and Statutes

State Codes and Statutes

Statutes > California > Fin > 22550-22551

FINANCIAL CODE
SECTION 22550-22551



22550.  Sections 22152, 22154, 22155, 22163, and 22164 do not apply
to any commercial loan of a bona fide principal amount of five
thousand dollars ($5,000) or more, or to a duly licensed finance
lender in connection with any such loan or loans, if the provisions
of this section are not used for the purpose of evading this
division.



22551.  In determining whether a loan is a loan of a bona fide
principal amount of the specified amount or more, the following
principles shall apply:
   (a) If a borrower applies for a loan in a bona fide principal
amount of less than the specified amount and a loan to that borrower
of a bona fide principal amount of the specified amount or more is
made by a licensed finance lender, no adequate economic reason for
the increase in the size of the loan exists, and by prearrangement or
understanding between the borrower and the licensee a substantial
payment is to be made upon the loan with the effect of reducing the
bona fide principal amount of the loan to less than the specified
amount within a short time after the making of the loan other than by
reason of a requirement that the loan be paid in substantially equal
periodical installments, then the loan shall not be deemed to be a
loan of the bona fide principal amount of the specified amount or
more.
   (b) A subsequent advance of money of less than a bona fide
principal amount of the specified amount pursuant to a revolving or
open-end loan agreement or similar agreement between a borrower and a
licensed finance lender which gives the borrower the right to draw
upon all or any part of the line of credit, or a loan agreement
providing for the making of advances to the borrower from time to
time up to an aggregate maximum amount which gives the borrower the
right to draw all or any part of the total amount, shall be deemed to
be a loan of a bona fide principal amount of the specified amount or
more if the line of credit or the aggregate maximum amount is a bona
fide principal amount of the specified amount or more and the
initial advance was a bona fide principal amount of the specified
amount or more even though the actual unpaid balance after the
advance or at any other time is less than a bona fide principal
amount of the specified amount.
   (c) If a loan made by a licensed finance lender has a bona fide
principal amount of the specified amount or more, the fact that the
transaction is in the form of a sale of accounts, chattel paper,
goods, or instruments, or a lease of goods, or in the form of an
advance on the purchase price of any of the foregoing, shall not be
deemed to affect the bona fides of the amount thereof.
   (d) For the purposes of this section, "the specified amount" means
five thousand dollars ($5,000).
   (e) For the purposes of determining whether the loan amount
exceeds a regulatory ceiling, the "bona fide principal amount" shall
not be comprised of any charges or any other fees or recompense
specified in Sections 22500, 22501, and 22601. Nothing in this
subdivision shall be construed to prevent those specified charges,
fees, and recompense that have been earned and remain unpaid in an
existing loan from being considered as part of the bona fide
principal amount of a new loan to refinance that existing loan,
provided the new loan is not made for the purpose of circumventing a
regulatory ceiling provision. This subdivision is intended to define
the meaning of "bona fide principal amount" as used in this division
solely for the purposes of determining whether the loan amount
exceeds a regulatory ceiling, and is not intended to affect the
meaning of "principal" for any other purpose.


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