Spring 2007-02 Government borrowing limit removed
Government borrowing limit removed
Individual lending limits established by the Puerto Rico Bank Act are no longer applicable when the borrower is the government of Puerto Rico or the United States, or any of their respective instrumentalities or subdivisions.
Section 17 of the Bank Act fixes at 15% of a lending bank’s capital the maximum that it can lend to an individual borrower and its related interests. In some cases, like when the loan is secured, the limit is raised to 331/3%.
Another of the exceptions to the 15% limit used to be loans to the government-both local and federal-and its agencies, instrumentalities, municipalities, etc. But these were still subject to the higher 331/3%. Act Number 14 of February 23, 2007, changed that. Now loans to the government are fully exempt from lending limits.
© 2007 Goldman Antonetti & Cordóva, LLC