A bank which makes a small business loan may (a) require one or more comakers or endorsers of the note evidencing the loan, or one or more guarantors of payment of the note;
(b)take an interest in property, real or personal, or both, to secure payment of the loan. When an interest in real property is taken as such security, it shall not be subject to any provision of article 14, sections 64 through 70, of the act of which this act is a supplement;
(c)when the payment of the loan is secured, require that the property constituting the security by insured for the benefit of the bank, against such loss or damage as the bank may require, and may retain out of the proceeds of such loan the premium for such insurance. If such insurance expires, lapses, or is canceled, and other insurance by ins
Free access — add to your briefcase to read the full text and ask questions with AI
A bank which makes a small business loan may (a) require one or more comakers or endorsers of the note evidencing the loan, or one or more guarantors of payment of the note; (b) take an interest in property, real or personal, or both, to secure payment of the loan. When an interest in real property is taken as such security, it shall not be subject to any provision of article 14, sections 64 through 70, of the act of which this act is a supplement; (c) when the payment of the loan is secured, require that the property constituting the security by insured for the benefit of the bank, against such loss or damage as the bank may require, and may retain out of the proceeds of such loan the premium for such insurance. If such insurance expires, lapses, or is canceled, and other insurance by insurers and in amounts satisfactory to the bank is not furnished to the bank without lapse of coverage, the bank may obtain insurance upon such property, and the cost thereof, less the amount of the return premium, if any, received by the bank on cancellation of prior insurance paid for by the borrower or the cost of which was retained out of the proceeds of the loan, shall be added to and become part of such loan, payable upon demand with interest at the legal rate; and, in default of such payment after such demand, the entire unpaid balance of the loan shall, at the election of the bank, become immediately due and payable; (d) when the payment of such loan is secured, and provision is made by law for the filing or recording of the instrument of security or notice or statement thereof, require compliance with such provision and retain the cost of such recording or filing out of the proceeds of the loan; (e) when the payment of such loan is secured, and the property constituting such security is appraised by a person not an officer, director, employee or other agent of the bank, pay the cost of such appraisal and may retain such cost out of such loan, but in no event shall the amount so retained, or the amount charged the borrower for such appraisal, exceed the amount paid by the bank for such appraisal or 1% of the sum borrowed, whichever is less; (f) at the written request of a borrower who is an individual, obtain or provide insurance on the life of the borrower pursuant to the provisions of "An act to provide for the regulation of credit life insurance and credit accident and health insurance, as defined, and supplementing Title 17 of the Revised Statutes" (P.L.1958, c. 169); and the bank may deduct and retain from the proceeds of the loan an amount equal to the premium lawfully charged by the insurer issuing such insurance. If insurance is obtained or provided as herein provided, the bank shall deliver or cause to be delivered to the insured borrower at the time when the loan is made, a copy of the insurance policy, or a certificate therefor, or a copy of the application for such policy, or a notice of proposed insurance as required by law. If there is more than one person liable for the payment of any such loan, whether as borrower or otherwise, insurance may be obtained or provided as authorized herein on the life of only one such person. Nothing in any other law of this State shall prohibit a bank, or any employee of a bank, from collecting the premium or identifiable charge for life insurance obtained or provided as authorized herein, or prevent a bank from receiving or retaining any dividend or other gain or advantage resulting from such insurance. Nothing herein shall be construed as prohibiting a bank from taking an assignment of any other type of life insurance policy as security for the payment of any such loan. L.1964, c. 162, s. 6.