| 1 | 1 | | By: Villarreal (Senate Sponsor - Carona) H.B. No. 1979 |
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| 2 | 2 | | (In the Senate - Received from the House April 22, 2013; |
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| 3 | 3 | | May 7, 2013, read first time and referred to Committee on Business |
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| 4 | 4 | | and Commerce; May 14, 2013, reported favorably by the following |
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| 5 | 5 | | vote: Yeas 8, Nays 0; May 14, 2013, sent to printer.) |
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| 6 | 6 | | |
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| 7 | 7 | | |
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| 8 | 8 | | A BILL TO BE ENTITLED |
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| 9 | 9 | | AN ACT |
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| 10 | 10 | | relating to interest on commercial loans. |
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| 11 | 11 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 12 | 12 | | SECTION 1. Section 306.002, Finance Code, is amended by |
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| 13 | 13 | | adding Subsection (c) to read as follows: |
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| 14 | 14 | | (c) The provisions of this chapter providing authorizations |
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| 15 | 15 | | with respect to certain transactions do not affect or negatively |
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| 16 | 16 | | impact any rules of law applicable either to other transactions |
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| 17 | 17 | | subject to this chapter or to any transactions not subject to this |
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| 18 | 18 | | chapter. |
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| 19 | 19 | | SECTION 2. Section 306.003, Finance Code, is amended to |
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| 20 | 20 | | read as follows: |
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| 21 | 21 | | Sec. 306.003. COMPUTATION OF LOAN TERMS [TERM]. (a) In |
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| 22 | 22 | | addition to any other method otherwise permitted under this title, |
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| 23 | 23 | | a creditor and an obligor may agree to compute an annual interest |
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| 24 | 24 | | rate on a commercial loan on a 365/360 basis or a 366/360 basis, as |
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| 25 | 25 | | applicable, determined by applying the ratio of the percentage |
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| 26 | 26 | | annual interest rate agreed to by the parties over a year of 360 |
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| 27 | 27 | | days, multiplied by the outstanding principal balance, multiplied |
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| 28 | 28 | | by the actual number of days the principal balance is outstanding. |
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| 29 | 29 | | A creditor and an obligor may also agree to compute the term and |
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| 30 | 30 | | rate of a commercial loan based on a 360-day year consisting of 12 |
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| 31 | 31 | | 30-day months. Each interest [For purposes of this chapter, each] |
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| 32 | 32 | | rate ceiling under Chapters 302 and 303 expressed as a rate per year |
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| 33 | 33 | | may mean a rate per year computed in accordance with this section |
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| 34 | 34 | | [consisting of 360 days and of 12 30-day months]. |
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| 35 | 35 | | (b) A creditor and an obligor may agree that one or more |
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| 36 | 36 | | payments of interest due or that are scheduled to be due with |
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| 37 | 37 | | respect to a commercial loan may be paid on a periodic basis when |
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| 38 | 38 | | due wholly or partly by adding to the principal balance of the loan |
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| 39 | 39 | | the amount of unpaid interest due or scheduled to be due, regardless |
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| 40 | 40 | | of whether the interest added to the principal balance is evidenced |
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| 41 | 41 | | by an existing or a separate promissory note or other agreement. On |
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| 42 | 42 | | and after the date an amount of interest is added to the principal |
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| 43 | 43 | | balance under this subsection, that amount no longer constitutes |
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| 44 | 44 | | interest, but instead constitutes part of the principal for |
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| 45 | 45 | | purposes of calculating the maximum lawful rate or amount of |
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| 46 | 46 | | interest on the loan. |
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| 47 | 47 | | SECTION 3. The changes in law made by this Act apply only to |
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| 48 | 48 | | a loan agreement entered into on or after the effective date of this |
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| 49 | 49 | | Act. A loan agreement entered into before the effective date of |
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| 50 | 50 | | this Act is governed by the law in effect on the date the agreement |
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| 51 | 51 | | was entered into, and the former law is continued in effect for that |
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| 52 | 52 | | purpose. |
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| 53 | 53 | | SECTION 4. This Act takes effect September 1, 2013. |
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| 54 | 54 | | * * * * * |
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