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Committee clears bill aligning bank lending-limit calculations with UCC
Summary
SB79, a cleanup bill to align Arkansas' legal lending-limit calculations with the Uniform Commercial Code so consumer and business loans are treated consistently, passed the Insurance & Commerce Committee by voice vote.
The Insurance & Commerce Committee approved Senate Bill 79, a cleanup measure that aligns the state’s legal lending-limit calculations with the Uniform Commercial Code (UCC). John Allen, deputy commissioner of the Arkansas State Bank Department, told the committee the change makes consumer and personal loans count the same as other loans for the purpose of calculating a bank’s legal lending exposure.
Allen explained the legal-lending limit is a percentage of a bank’s capital; he used a 20% figure as an example: "If the bank had $10,000,000 in capital, that means they could loan up to $2,000,000 to you or any other individual, and that's what this 20%" represents. Members asked how that limit interacts with Arkansas’ constitutional 17% interest-rate cap; Allen clarified the legal-lending limit addresses loan size relative to bank capital and is separate from statutory interest-rate limits.
With no public testimony recorded, committee members moved and seconded the measure and approved SB79 by voice vote. The committee chair noted this was largely technical cleanup language and said the measure had not drawn substantive opposition during outreach to stakeholders.
The bill will proceed to the next stage of the legislative process.
