Ga. Comp. R. & Regs. R. 80-2-12-.05 - Combination of Debt for Legal Lending Limit Purposes

(a) General Rule. Pursuant to Code Section 7-1-658, loans or extensions of credit to one person will be attributed to another person and each person will be deemed a borrower:

(1) When proceeds of a loan or extension of credit are to be used for the direct benefit of the other person, to the extent of the proceeds so used;

(2) When a common enterprise is deemed to exist between the persons as the persons within the group are directly or indirectly related through common control including where one borrower is directly or indirectly controlled by another borrower;

(3) When there is a common use of funds between the persons; or

(4) When a person has a financial obligation on a loan or an extension of credit, to the extent of such obligation.

(b) Definitions. For purposes of this Rule, the below terms shall be defined as follows:

(1) Common control. The direct or indirect possession of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise. Without limiting the foregoing, a person shall be considered to control another person if the first person:

(A) Owns, controls or holds with power to vote 25 percent or more of any class of voting securities of the other person;

(B) Controls in any manner the election of a majority of the directors, trustees, or persons performing similar functions of the other person; or

(C) Exercises a controlling influence over the management or policies over the other person as determined by the department.

(2) Common use of funds. The proceeds of a loan or an extension of credit to a borrower will be deemed to be a common use of funds and will be attributed as one loan when the proceeds, or assets purchased with the proceeds, are comingled or used to acquire property, goods, or services for the purpose of a shared common commercial objective between the borrowers.

(3) Direct benefit. The proceeds of a loan or extension of credit to a borrower will be deemed to be used for the direct benefit of another person and will be attributed to the other person when the proceeds, or assets purchased with the proceeds, are transferred to another person, other than in a bona fide arm's length transaction where the proceeds are used to acquire property, goods, or services.

(4) Obligation. A commitment that creates a liability or contingent liability for payment on a loan or extension of credit irrespective of whether the person is a borrower.

(5) Person. An individual or a corporation, limited liability company, partnership, trust, association, joint venture, sole proprietorship, unincorporated organization, or any other form of entity.

Notes

Ga. Comp. R. & Regs. R. 80-2-12-.05

O.C.G.A. § 7-1-658.

Original Rule entitled "Combination of Debt for Legal Lending Limit Purposes" adopted. F. Jan. 8, 2021; eff. Jan. 28, 2021.