QUESTION
Can a private individual grant commercial loan in Texas without a license or filing requirement?
Asked on Oct 19th, 2012 on Business Litigation - Texas
More details to this question:
My cousin claims the loan he made to me is commercial and therefore legally at 18 per cent interest without violating usury law. He gave me the loan because I am family, but he claims now that if the USE can be proven as commercial, too bad for me on the interest rate. Also on usury, he did not credit significant payments made, despite fact I have cancelled checks. I suspect in court a judge would give me the benefit and deduct these checks from outstanding balance due. But can I not also claim usury, given the resulting demand for payment exceeds even 18 percent?
1 ANSWER
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Yes, a natural person can make a commercial loan in Texas. Whether the loan is "commercial" in nature depends on the borrower's purpose at the time of loan origination. The Finance Code defines “commercial loan” to mean a loan that is made primarily for business, commercial, investment, agricultural, or similar purposes. The term does not include a loan made primarily for personal, family, or household use. Fin. Code § 306.001(5).
Computation of the correct amount owed is a separate issue. Obviously, you have to pay only what you owe.
It is not possible to determine from your inquiry whether this loan is of a type on which more than 18% interest may be charged, because you do not supply sufficient facts.
Answered on Oct 20th, 2012 at 12:04 PM