Title 12

SECTION 7.1006

7.1006 Loan agreement providing for a national bank share in profits, income, or earnings or for stock warrants.

§ 7.1006 Loan agreement providing for a national bank share in profits, income, or earnings or for stock warrants. Link to an amendment published at 85 FR 83728, Dec. 22, 2020.

A national bank may take as consideration for a loan a share in the profit, income, or earnings from a business enterprise of a borrower. A national bank also may take as consideration for a loan a stock warrant issued by a business enterprise of a borrower, provided that the bank does not exercise the warrant. The share or stock warrant may be taken in addition to, or in lieu of, interest. The borrower's obligation to repay principal, however, may not be conditioned upon the value of the profit, income, or earnings of the business enterprise or upon the value of the warrant received.

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