§ 14401 Credit Union Borrowing Limits

This law says a credit union can only borrow up to half of its own paid‑in and unimpaired capital plus surplus, and it doesn't count special loans from the National Credit Union Central Liquidity Facility.

Key Takeaways

•A credit union can only borrow up to 50% of its capital and surplus.
•Loans from the National Credit Union Central Liquidity Facility are ignored when figuring the limit.
•"Certificate for funds" just means borrowed money.

Example

A credit union has $10 million in paid‑in capital and $2 million in surplus.

The law lets the credit union borrow no more than 50% of $12 million, which is $6 million. If it tried to borrow $7 million, it would be breaking the rule.

How to Calculate

Maximum Borrowing = 0.5 × (Paid‑in Capital + Unimpaired Capital + Surplus)

Add together the paid‑in capital, any unimpaired capital, and the surplus.
Multiply that total by 0.5 (or divide by 2).
The result is the most the credit union may borrow, not counting loans from the National Credit Union Central Liquidity Facility.

The credit union has $8 million paid‑in capital, $1 million unimpaired capital, and $1 million surplus.

Result: Maximum Borrowing = 0.5 × (8,000,000 + 1,000,000 + 1,000,000) = 0.5 × 10,000,000 = 5,000,000. So the credit union can borrow up to $5 million.

A credit union may borrow money from any source in an aggregate amount not to exceed 50 percent of the paid-in and unimpaired capital and surplus of the credit union. Loans from the National Credit Union Central Liquidity Facility (12 U.S.C. Sec. 1795 et seq.) shall not be included in computing the aggregate borrowings of a credit union. For the purposes of this division, “certificate for funds” means borrowed money. (Amended by Stats. 2004, Ch. 183, Sec. 107. Effective January 1, 2005.)

Key Takeaways

•A credit union can only borrow up to 50% of its capital and surplus.
•Loans from the National Credit Union Central Liquidity Facility are ignored when figuring the limit.
•"Certificate for funds" just means borrowed money.

Example

A credit union has $10 million in paid‑in capital and $2 million in surplus.

The law lets the credit union borrow no more than 50% of $12 million, which is $6 million. If it tried to borrow $7 million, it would be breaking the rule.

How to Calculate

Maximum Borrowing = 0.5 × (Paid‑in Capital + Unimpaired Capital + Surplus)

Add together the paid‑in capital, any unimpaired capital, and the surplus.
Multiply that total by 0.5 (or divide by 2).
The result is the most the credit union may borrow, not counting loans from the National Credit Union Central Liquidity Facility.

The credit union has $8 million paid‑in capital, $1 million unimpaired capital, and $1 million surplus.

Result: Maximum Borrowing = 0.5 × (8,000,000 + 1,000,000 + 1,000,000) = 0.5 × 10,000,000 = 5,000,000. So the credit union can borrow up to $5 million.

Key Takeaways

Example

How to Calculate

Key Terms

References

§ 14401 Credit Union Borrowing Limits

Key Takeaways

Example

How to Calculate

Key Terms

References

Key Takeaways

Example

How to Calculate

Key Terms

Related Statutes

References

Key Takeaways

Example

How to Calculate

Key Terms

Related Statutes

References