House Bill No. 5542
               House Bill No. 5542

               PUBLIC ACT NO. 98-46


AN ACT CONCERNING  THE  INTEREST  RATE ON LOANS TO
CERTAIN BUSINESS ORGANIZATIONS.


    Be it enacted  by  the  Senate  and  House  of
Representatives in General Assembly convened:
    Section  1.  Section   37-9   of  the  general
statutes  is  repealed   and   the   following  is
substituted in lieu thereof:
    The provisions of sections 37-4, 37-5 and 37-6
shall not affect:  (1)  Any  loan  made  prior  to
September 12, 1911;  (2)  any loan made by (A) any
national bank, or  any  bank  or  trust company or
state or federal  savings  bank incorporated under
the  laws of  this  state,  (B)  any  wholly-owned
subsidiary of such  national  bank,  bank or trust
company or state or federal savings bank, except a
loan for consumer  purposes,  (C)  any  federal or
state chartered savings  and  loan  association or
(D) any credit  union or federal credit union; (3)
any bona fide  mortgage of real property for a sum
in excess of  five  thousand dollars; (4) any loan
made  to  a   foreign   or  domestic  corporation,
[general  or  limited]  STATUTORY  TRUST,  LIMITED
LIABILITY  COMPANY, GENERAL,  LIMITED  OR  LIMITED
LIABILITY partnership or association organized for
a  profit  or   any   individual,   provided  such
corporation,    TRUST,    COMPANY,    partnership,
association or individual  is engaged primarily in
commercial,    manufacturing,    industrial     or
nonconsumer pursuits and provided further that the
funds  received  by   such   corporation,   TRUST,
COMPANY,  partnership, association  or  individual
are  utilized  in   such   entity's   business  or
investment activities and  are  not  utilized  for
consumer purposes and  provided  further  that the
original indebtedness to be repaid is in excess of
ten thousand dollars,  or,  in  the case of one or
more advances of  money  of less than ten thousand
dollars  made  pursuant   to   a   revolving  loan
agreement or similar agreement or a loan agreement
providing  for  the  making  of  advances  to  the
borrower from time  to  time  up  to  an aggregate
maximum amount, the  total principal amount of all
loans owing by  the  borrower to the lender at the
time of any  such  advance  is  in  excess  of ten
thousand dollars; (5)  any  obligations, including
bonds, notes or  other  obligations, issued by (A)
the state, (B)  any  municipality,  including  any
city,    town,    borough,    district,    whether
consolidated  or  not,   or   other   public  body
corporate, or (C)  any authority, instrumentality,
public agency or  other  political  subdivision of
the state or  of a municipality; (6) any loan made
by (A) the  state, (B) any municipality, including
any  city,  town,   borough,   district,   whether
consolidated  or  not,   or   other   public  body
corporate, or (C)  any authority, instrumentality,
public agency or  other  political  subdivision of
the state or  of a municipality; (7) any loan made
for the purpose  of  financing  the  purchase of a
motor vehicle, a  recreational  vehicle or a boat,
carrying an interest  rate  of  not  more than (A)
eighteen per cent  per  annum  on loans made on or
after July 1,  1981, and prior to October 1, 1985,
and (B) on loans made on or after October 1, 1985,
and prior to October 1, 1993, (i) sixteen per cent
per annum for  new  motor  vehicles,  recreational
vehicles or boats,  and (ii) eighteen per cent per
annum  for  used   motor   vehicles,  recreational
vehicles  or  boats,   payable  in  four  or  more
monthly, quarterly or  yearly instalments which is
unsecured or in which a security interest is taken
in such property;  (8)  any loan by an institution
of higher education  made to an individual for the
purpose of enabling attendance at such institution
and carrying an interest rate of not more than the
greater of (A)  the maximum rate then permitted by
section 37-4, or (B) a rate which is not more than
five per cent  in  excess  of  the  discount rate,
including any surcharge,  on ninety-day commercial
paper in effect  from  time to time at the federal
reserve bank in the federal reserve district where
such institution is  located; (9) any loan made to
a plan participant or beneficiary from an employee
pension benefit plan  as  defined  in the Employee
Retirement Income Security Act of 1974, Public Law
93-406,  as  from   time   to  time  amended.  The
provisions of part  III  of  chapter 668 shall not
apply to loans made pursuant to subdivision (7) of
this section. No  provision  of this section shall
prevent any such bank, trust company or federal or
state  chartered  savings  and  loan  association,
credit union or  federal  credit  union  or  other
lender from recovering  by  an  action  at law the
amount  of  the   principal   and   the   interest
stipulated  or interest  at  the  legal  rate,  if
interest  is not  stipulated,  in  any  negotiable
instrument which it  has acquired for value and in
good faith without  notice  of  illegality  in the
consideration. For the  purpose  of  this section:
"Interest"  shall  not  be  construed  to  include
attorney's fees, including preparation of mortgage
deed and note,  security agreements, title search,
waivers  and  closing   fees,  survey  charges  or
recording fees paid  by the mortgagor or borrower;
"consumer purposes" shall  mean the utilization of
funds for personal, family or household purchases,
acquisitions or uses.
    Sec. 2. This  act  shall  take effect from its
passage and shall  be  applicable  to  loans  made
before, on or after said date.

Approved May 19, 1998