voter registration, voting, and
access to election-related data.
* Bobbie S. Mack, Chairman * David J. McManus, Jr., Vice Chairman * Rachel T. McGuckian * Patrick H. Murray * Charles E. Thomann
State Administrator of Elections: * Linda H. Lamone
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10.1 Generally
Loans are a permissible way for a campaign to receive funds. There is no limit on the amount of money that can be loaned to the campaign. However, unless the loan is executed properly and paid off in a timely manner, the loan will be converted into a contribution. This could have serious legal consequences for the political committee and the lender if the loan exceeds applicable contribution limits.
10.2 Receipt of Loans
1. Non-Candidate committees
Non- Candidate committees may receive a loan only from a financial institution or an entity in the business of making loans. It may not receive a personal loan from an individual.
2.Candidate Committees
A. Formal
A candidate committee may receive a loan from anyone only if the loan is:
- Personally guaranteed by the candidate; and
- Repaid by the end of the next election cycle immediately following the election cycle in which the loan was received.
B. Informal Candidate Loans
A candidate or the candidate’s spouse may make an informal loan to the candidate’s committee. To do so, the candidate (or the candidate’s spouse) simply loans money to his or her own campaign and he or she does not file the loan consent form or charge interest. By making an informal loan, the repayment period (by the end of the next election cycle) is not a applicable.
However, if the candidate does want to charge interest, the loan consent form must be filled out (and filed with the campaign finance report) and the loan must be repaid by the end of the next four-year-cycle.
- § 13-230 of the Election Law Article
10.3 Interest
Interest must be calculated and charged on all loans, based on the prime rate on the day that the loan is made.
- If the lender agrees not to be paid interest, the interest amount that should have been paid must be treated as an in-kind contribution from the lender.
- If the lender agrees to an interest rate that is less than the prime rate, the difference between interest at the agreed rate and interest at the prime rate must be treated as an in-kind contribution from the lender.
10.4 Loan and Repayment Examples
Example 1
Entity Name |
Bank of Maryland |
Date Loan Accepted |
10/26/2010 |
Loan Amount |
$1,000 |
Interest Rate Charge |
8% per annum |
Prime Interest |
8% per annum |
Balance |
$1,080 |
In-Kind Interest Amount |
0 |
Repayment Terms |
1 year |
The loan, amount, source of funds and interest expense must be reported on the campaign finance report.
Example 2
Candidate Committee – General Loan
Entity Name |
Bank of Maryland |
Date Loan Accepted |
10/26/2010 |
Loan Amount |
$10,000 |
Interest Rate Charge |
4% per annum |
Prime Interest |
6% per annum |
Interest Paid |
$400 |
Interest Rate (prime) |
$600 |
In-Kind Interest Amount |
$200 |
Repayment Terms |
5 years |
Assume the loan inception date is 10/20/10, thus incurred within the 2010 contribution cycle (1/1/07 through 12/31/10). If the loan is not from a financial institution, the loan must be repaid before the end of the next election cycle or the 2014 Election Cycle (1/1/011 through 12/31/2014) and must be personally guaranteed by the candidate. If the loan is not repaid by the end of the next election cycle, it becomes a contribution and would exceed the $4,000 contribution limit.
Additionally, in this example the interest rate charged on the loan is 4%, whereas the prime rate is 6%. The 2% difference must be accounted for as an in-kind contribution of $200.
(See Section 11.10 of the Summary Guide for information on how to report loans on the campaign finance report.)