EXEMPTION OF LOANS TO BUSINESS ENTITIES FROM USURY STATUTE
Act 52 of 1970
438.61 “Business entity” and “related entity” defined; extension of credit to business entity; agreement in writing to rate of interest.
Sec. 1.
(1) As used in this act:
(a) "Business entity" means a corporation, trust, estate, partnership, cooperative, or association or a natural person who furnishes to the extender of the credit a sworn statement in writing specifying the type of business and business purpose for which the proceeds of the loan or other extension of credit will be used. An exemption under this act does not apply if the extender of credit has notice that the person signing the sworn statement was not engaged in the business indicated on the sworn statement.
(b) "Related entity" means a business entity other than a natural person whose members, owners, partners, or limited partners include a state or national chartered bank, a state or federal chartered savings bank, a state or federal chartered savings and loan association, a state or federal chartered credit union, an insurance carrier, or finance subsidiary of a manufacturing corporation.
(2) Notwithstanding Act No. 326 of the Public Acts of 1966, being sections 438.31 to 438.33 of the Michigan Compiled Laws, and Act No. 259 of the Public Acts of 1968, being sections 438.41 to 438.42 of the Michigan Compiled Laws, but subject to any other applicable law of this state or of the United States which regulates the rate of interest, it is lawful in connection with an extension of credit to a business entity by a state or national chartered bank, a state or federal chartered savings bank, a state or federal chartered savings and loan association, a state or federal chartered credit union, insurance carrier, finance subsidiary of a manufacturing corporation, or a related entity for the parties to agree in writing to any rate of interest.
(3) Notwithstanding Act No. 326 of the Public Acts of 1966, it is lawful in connection with an extension of credit to a business entity by any person other than a state or nationally chartered bank, a state or federal chartered savings bank, a state or federal chartered savings and loan association, a state or federal chartered credit union, insurance carrier, finance subsidiary of a manufacturing corporation, or a related entity for the parties to agree in writing to any rate of interest not exceeding the rate allowed under Act No. 259 of the Public Acts of 1968.
History: 1970, Act 52, Imd. Eff. July 10, 1970 ;-- Am. 1978, Act 15, Imd. Eff. Feb. 8, 1978 ;-- Am. 1983, Act 20, Imd. Eff. Mar. 31, 1983 ;-- Am. 1996, Act 501, Imd. Eff. Jan. 9, 1997
Notes of Decisions
In Re Dow Corning Corp., 237 B.R. 380 (Bankr. E.D. Mich. 1999).
· cites it 2× “41 (unless otherwise permitted by law, the maximum rate of interest is 25%); Mich. Comp.Laws § 438.61 (loans to business entities made by a regulated lender can carry any rate of interest agreed to by the parties); Mich.”
Grigg v. Michigan Nat'l Bank, 274 N.W.2d 752 (Mich. 1979).
· cites it 2× “200[275]) and MCL 438.61; MSA 19.15(71). Also, it appears that the persons whose credit card accounts were purchased by the defendant from retail stores (estimated at over 165,000) would also not be entitled to recovery, at least with respect to interest charges incurred before…”
In Re Backofen Est., 404 N.W.2d 675 (Mich. Ct. App. 1987).
· cites it 3× “At the center of this dispute is the "business entity exemption," MCL 438.61; MSA 19.15(71), to Michigan's *797 general usury statute, MCL 438.”
Krause v. Griffis, 443 N.W.2d 444 (Mich. Ct. App. 1989).
· cites it 4× “However, the following day MCL 438.61; MSA 19.15(71) was amended to permit nonregulated lenders to charge interest rates not exceeding fifteen percent.”
Eriksen v. Fisher, 421 N.W.2d 193 (Mich. Ct. App. 1988).
· cites it 2× “Since we conclude that the note was not usurious, we need not address defendant's claim that the loan came within MCL 438.61(3); MSA 19.15(71)(3) as a business loan for which the parties may agree to a rate of interest up to fifteen percent or defendant's claim that plaintiffs'…”
Dugan v. Vlcko, 307 F. Supp. 3d 684 (E.D. Mich. 2018).
“MCL 438.61(a). But in order for the business entity exception to apply here Plaintiff would have to show either that the Promissory Note included language discussing the business purpose for which the loan would be used or that there were some form of sworn statement…”
Grigg v. Michigan Nat'l Bank, 249 N.W.2d 701 (Mich. Ct. App. 1976).
“78 11 authorizes corporations to pay any rate of interest without regard to the usury laws, and MCLA 438.61; MSA 19.15(71), which became effective July 10, 1970, authorizes any "business entity” to agree with a bank to pay any rate of interest.”
Fed. Deposit Ins. v. Garbutt, 370 N.W.2d 387 (Mich. Ct. App. 1985).
“At trial, plaintiff argued that the asserted defense of usury was inapplicable to it because of the statutory exemption set forth in MCL 438.61; MSA 19.15(71). To that end, plaintiff introduced the "affidavit” of defendant and argued that, although it was not notarized and…”
First Bank v. Miller, 347 N.W.2d 715 (Mich. Ct. App. 1984).
“The trial judge reasoned that plaintiffs failure to qualify as a lender to a business entity under MCL 438.61; MSA 19.15 barred it from using the exceptions to the general interest rate contained in MCL 487.”
— Mich. Comp. Laws § 438.61(1) — 3 cases
In Re Backofen Est., 404 N.W.2d 675 (Mich. Ct. App. 1987).
“At the center of this dispute is the "business entity exemption," MCL 438.61; MSA 19.15(71), to Michigan's *797 general usury statute, MCL 438.”
Krause v. Griffis, 443 N.W.2d 444 (Mich. Ct. App. 1989).
“However, the following day MCL 438.61; MSA 19.15(71) was amended to permit nonregulated lenders to charge interest rates not exceeding fifteen percent.”
— Mich. Comp. Laws § 438.61(1)(a) — 1 case
— Mich. Comp. Laws § 438.61(2) — 3 cases
— Mich. Comp. Laws § 438.61(3) — 7 cases
Eriksen v. Fisher, 421 N.W.2d 193 (Mich. Ct. App. 1988).
“Since we conclude that the note was not usurious, we need not address defendant's claim that the loan came within MCL 438.61(3); MSA 19.15(71)(3) as a business loan for which the parties may agree to a rate of interest up to fifteen percent or defendant's claim that plaintiffs'…”
— Mich. Comp. Laws § 438.61(a) — 1 case
Dugan v. Vlcko, 307 F. Supp. 3d 684 (E.D. Mich. 2018).
“MCL 438.61(a). But in order for the business entity exception to apply here Plaintiff would have to show either that the Promissory Note included language discussing the business purpose for which the loan would be used or that there were some form of sworn statement…”
— Mich. Comp. Laws § 438.61(b)(2) — 2 cases
— Mich. Comp. Laws § 438.61(b)(3) — 2 cases
— Mich. Comp. Laws § 438.61(c) — 2 cases
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