Regulatory Alerts2020-01-01
South Dakota Division of Banking Memorandum on Senate Bill 166 Business-to-Business Lending Exemption
The South Dakota Division of Banking issued a memorandum to money lenders explaining Senate Bill 166, which creates a business-to-business lending exemption from rate limitations established by Initiated Measure 21. The bill defines this exemption as applying only to loans of at least five thousand dollars made to borrowers with federal employer identification numbers for commercial purposes. The Division clarifies that unfunded commitments do not count toward the minimum loan amount, meaning only actually extended funds qualify for the exemption.
DIVISION OF BANKING 1601 N. Harrison Avenue, Suite 1, Pierre, SD 57501 MEMORANDUM 605-773-3421 NUMBER: 20-020 DATE: June 30, 2017 TO: SOUTH DAKOTA MONEY LENDERS FROM: BRET AFDAHL, Director RE: SENATE BILL 166 The passage of Initiated Measure 21 (IM 21) impacted all lenders licensed pursuant to SDCL Chapter 54-4, not just those offering payday, title, and signature loans. Senate Bill 166 (SB 166) seeks to create a business-to-business lending exemption from the rate limitations of IM 21 as codified in SDCL 54-4-44. SB 166 defines “business-to-business lending” to mean any lending to or in furtherance of a business or commercial venture that is not for personal, family, or household use. SB 166 further limits the business-to-business lending exemption to only apply to loans that are in an amount not less than five thousand dollars, and only to borrowers with federal employer identification numbers. Please note that, for purposes of the $5000.00 minimum loan amount provided in SB 166, unfunded commitments do not qualify for the SB 166 business-to-business lending exemption. Only funds actually extended to borrowers will be treated as part of the total amount of lending, when the South Dakota Division of Banking (Division) makes a determination as to whether a line of credit qualifies for the SB 166 exemption.
If you would like additional information regarding this bill, or if you have any questions, please do not hesitate to contact the Division at 605-773-3421.