Borrowed Funds from Natural Persons, 12 CFR 701.38

Section 701.38 of the NCUA regulations grants federal credit unions the authority to borrow funds from a natural person as long as they maintain a signed promissory note which includes the terms and conditions of maturity, repayment, interest rate, method of computation and method of payment; and the promissory note and any advertisements for borrowing have clearly visible language stating that the note represents money borrowed by the credit union and does not represent shares and is not insured by the National Credit Union Insurance Fund (NCUSIF). NCUA will use this information to ensure a credit union’s natural person borrowings are in compliance and address all regulatory and safety and soundness requirements.

The latest form for Borrowed Funds from Natural Persons, 12 CFR 701.38 expires 2022-08-31 and can be found here.