As an institution we have two different interpretations of KRS 287.280. Can anyone provide any insight as to how you determine your maximum legal lending limit? In the past we have generally used an aggregated debt total of all affiliated borrows in a particular entity plus any outstanding for that entity. Recently our CEO has said we are only required to take into consideration the outstanding debt for the particular entity and not the total of the entity plus all affiliated borrowers. Which is more accurate? Any help is greatly appreciated.

Example: Can Mr. Smith and Mr. Jones borrow up to our legal lending limit individually and then form a partnership within a seperate entity and borrow up to the legal lending limit with that entity also?

First in KY you can choose to adopt either the federal or state lending limits. In either case, the partnership debt is fully atrtribuable to each partner. So, you should include in the calculation of lending limits the full amount of that partner's individual debt, plus the full amount of the partnership debt.