28.1503 Business loans.
It is lawful to charge, contract for, and receive any rate or amount of interest or other compen-sation, not to exceed 18 percent annually, with respect to any loan to any business or commercial organization or to a person or persons owning or desiring to acquire a business as a sole proprietor or joint venture, if the loan is transacted solely for the purpose of carrying on or acquiring a business or commercial investment. Business or commercial organization includes corporations, copartnerships, joint venture, limited partnerships, trusts, and any other bona fide business entity.History: 1973, PL 13-22; 1975, PL 14-16 § 3; amd 1980, PL 16-67 § 3.
Amendments: 1980 Raised interest rates.
Section not applicable to 90-day time or usage draft used in arrangement between an importer and a foreign corporation to buy goods on credit; 28.1501 applies Trans United Marketing, Ltd. v. Max Haleck. Inc., ASR (1977).
Use of creditor’s funds to “keep the company afloat” falls within gambit of “carrying on” business”, therefore 28.1503 applies and not subsection (a) of 28.1501. Max Haleck, inc. v. Trans United Marketing, inc., ASR (1977).
Under statute providing that interest on business loans may not exceed 18 per cent annually, creditor whose contract specified 20 per cent interest would have judgment for only 18 per cent. A.S.C.A. § 28.1503. Shantilal Brothers Limited v. K.M.S.T. Wholesales, Inc., 9 A.S.R.2d 62 (1988).