Loans: Monetary and In-kind

Disclosure

The following information must be reported for each loan received:

• the date the loan was received;
• the lender's name and address (and, if the loan is more than $250, report the lender’s occupation as well as name, city and state of the employer);
• if the loan is from the candidate or a contributor who has a per-election limit, show whether the loan is for the primary or the general election;
• the amount of the loan;
• the rate of interest charged (if any);
• the terms for repayment;
• the date by which the loan is to be repaid in full; and
• the names of any endorser, co-signer or loan guarantor.

All loans, regardless of the source:

• must be by written agreement;
• are reported in Part 1 of Schedule L and, if monetary, on the C-3 report, or if in-kind, in Part 1 of Schedule B; and
• are subject to contribution limits as well as the restriction in place during the 21 days before the general election when all contributions from one source (including loans) may not exceed $75,000 to a candidate for statewide office or $7,500 to a legislative candidate, unless the contributor is the state committee of a bona fide political party.

Repayments are reported in Part 2 of the Schedule L and on the C-4 report. The amount contributed by lenders and co-signers is reduced as their loans are repaid.

Loans made by the candidate

A candidate may loan personal funds to the campaign. The maximum amount the campaign may repay the candidate for all loans he or she makes to the campaign is $7,500 for the primary election and $7,500 for the general election. A candidate’s primary election loan must be spent on the primary and a general election loan may only be used for general election expenses. Read the In-Kind Loans section below to learn when reimbursing the candidate for out-of-pocket purchases counts against the loan repayment limit. See related: PDC Interpretation 14-01

Monetary loans

Loans to a candidate or candidate's committee from commercial lending institutions made in the regular course of business on the same terms ordinarily available to the public are considered loans to the candidate and are reported on the C-3 and Schedule L as coming from the candidate (not the lending institution). Persons who guarantee or co-sign such loans have made a contribution in the full amount of the loan. Repayment of commercial loans to a candidate or candidate's committee may not exceed $7,500 per election.

A loan from an individual, political committee, corporation, union or other entity that is received by the candidate or the campaign is a contribution to the campaign from the lender, and when combined with other contributions from that contributor, may not exceed the limit allowed by law. Persons who co-sign a loan have made a contribution in the full amount of the loan.

In-kind loans

When a candidate spends personal funds on the campaign, wants to be reimbursed, and is still waiting to be repaid 21 days after the out-of-pocket expenditure was made, the candidate’s expenditure becomes an in-kind loan. An in-kind loan counts against the candidate’s loan repayment limit. Entering an in-kind loan in ORCA is similar to entering a monetary loan except that a description of the purchase is included.

In-kind loan vs. debt

In PDC Interpretation 12-01, the Commission established criteria to help campaigns distinguish in-kind loans from vendor debt.  This is important, because in-kind loans are subject to limits and vendor debt is not. Indicators that an item or service provided to a campaign is an in-kind loan and not a debt, include:

• a person other than the campaign pays for the item or service and
• before accepting the item or service, the campaign agrees to reimburse the contributor.

A debt is incurred when the candidate or the candidate’s agent places an order for goods or services, or otherwise obligates the candidate or campaign to a vendor who is in the business of selling the goods or services provided to the campaign, and the services are provided to the campaign in the ordinary course of business.