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#1919630 - 05/02/14 01:43 PM Annual Interest Payment Required?
QCL Offline
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QCL
Joined: May 2002
Posts: 6,259
NW IL
Must we require our loan customers to make an interest payment at least annually?

A lender wrote a commercial single pay note for 14 months. Interest will be paid at the end of the loan. Senior management thinks that they remember there being an IRS or GAAP issue requiring at least an annual interest payment, but I cannot put my finger on it. I do not believe that there is a regulatory requirement, but do you have any thoughts?

Or is it just a good practice?

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Lending Compliance
#2169850 - 03/23/18 03:21 PM Re: Annual Interest Payment Required? QCL
Whyisit Offline
Member
Joined: Nov 2004
Posts: 59
Has been our practice - but where does it come from?

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#2169858 - 03/23/18 03:38 PM Re: Annual Interest Payment Required? QCL
Richard Insley Online
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Richard Insley
Joined: Oct 2000
Posts: 10,179
Toano, VA
Yeah, I'd talk to my bank's tax advisor. Another possible issue is the regulators' current views on asset performance.
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#2169906 - 03/23/18 05:45 PM Re: Annual Interest Payment Required? QCL
HRH Okie Banker Offline
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Joined: Jan 2003
Posts: 3,070
Oklahoma
I don't remember that being a requirement anywhere. You have to throw more capital at a single pay loan over 12 months. That is what comes to mind for me. We limit ours to 12 months for that reason.
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