§ 18274 Industrial Loan Property Limits

• •A company that lends money can't have more than 5% of its total money tied up in loans for empty land unless they get special permission.
• •If a loan for empty land is in trouble, the company might need extra permission to take more stuff as backup to protect their money.
• •This rule is for companies that have people investing money with them.

A small bank has $100 million in total stuff it owns. It wants to lend $6 million to people buying empty land to build houses later.

The bank can only lend $5 million for empty land without asking for special permission first. If it lends the $6 million without permission, it’s breaking the rule. If someone can’t pay back their $500,000 loan for empty land, the bank might need to ask for permission before taking their car or house as extra backup to get their money back.