A TREATISE ON USE OF PRIVATE CREDIT
May 18, 2021
An entire industry exists that uses assets provided by a Borrower to do business to create profits and to therefrom provide the Borrower the loaned funds.
In such credit activities it is typically not possible for the Borrower to know how or how much profit the Lender is obtaining using the Borrower’s collateral.
Therefore, it is typically not possible for a Borrower to know whether or not the Lender is using the collateral in illegal activities.
Yet, if illegal activities are later found to have been involved, the Borrower may be in legal jeopardy.
To avoid this, a Borrower must have secure knowledge that the funds being provided are free, clear, clean, and of non-criminal origin.
Because a loan from a bank involves creation of new money, such funds would always qualify.
See https://www.chips-corner.com/NEWS/news.html
See MONEY CREATION IN THE MODERN ECONOMY (VIDEO) in https://www.chips-corner.com/NEWS/news.html
But if a loan is from proceeds of using funds loaned by a bank, or from commercial activities, the legality of the proceeds should be known and provable in order to avoid possible future legal jeopardy.
Fortunately, in a complex world, a simple solution has been provided by law.
That is, if funds are held on deposit, the depository institution may take full responsibility and certify that the funds are clean, clear, unencumbered, and of non-criminal origin.
This certification may be assumed if transfers of funds are done in legally acceptable manners through which authorities may ascertain their origin and use.
In conclusion, in our view, private loans may be used within the TEXAS HOLDINGS, INC 2016 BUSINESS MODEL as long as the funds loaned come from a depository held accountable by jurisdictional authorities.