Loan agreement providing for a national bank or Federal savings association share in profits, income, or earnings or for stock warrants.

§ 7.1006 Loan agreement providing for a national bank or Federal savings association share in profits, income, or earnings or for stock warrants. A national bank or Federal savings association may take as consideration for a loan a share in the profit, income, or earnings from a business enterprise of a borrower. A national bank or Federal savings association also may take as consideration for a loan a stock warrant issued by a business enterprise of a borrower, provided that the bank or savings association does not exercise the warrant. The share or stock warrant may be taken in addition to, or in lieu of, interest. The borrower's obligation to repay principal, however, may not be conditioned upon the value of the profit, income, or earnings of the business enterprise or upon the value of the warrant received. [61 FR 4862, Feb. 9, 1996, as amended at 85 FR 83728, Dec. 22, 2020]