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Handling party loans, debts and advances

A loan from a person or committee to a candidate or a political committee is a contribution to the extent that it remains unpaid. Once repaid in full, a loan no longer counts against the contributor’s contribution limit. Unlike other loans, bank loans are not considered contributions if they are made in the ordinary course of business and on a basis that assures repayment.

A corporate vendor may extend credit to a political committee in the ordinary course of business and under substantially similar terms offered to a nonpolitical committee. However, it may not extend credit for a longer period of time than is normally practiced in the creditor’s trade. Any settlement of a debt between a creditor and a political committee for less than the full amount owed must comply with the debt settlement procedures prescribed by FEC rules.

When an individual uses personal funds (or personal credit) to pay for a committee expense, that payment is generally an in-kind contribution from that individual.

Special reporting rules apply to loans, debts and advances.

Loans

A loan is considered a contribution to the extent of the outstanding balance of the loan. (Bank loans, however, are not considered contributions if made in the ordinary course of business and on a basis that assures repayment.)

An unpaid loan, when added to other contributions from the same contributor, must not exceed the contribution limit. Repayments made on the loan reduce the amount of the contribution. Once repaid in full, a loan no longer counts against the contributor’s contribution limit. However, a loan exceeding the limit is unlawful even if it is repaid in full.

Besides being reported as a contribution, a loan must be continuously reported until it is fully repaid.

Debts

Debts and obligations must be reported continuously until repaid.

Unpaid bills and written contracts or agreements to make expenditures are considered debts.

Debts and obligations (other than loans) are reported as debts owed to or by the committee on Schedule D. A debt of $500 or less is reportable once it has been outstanding 60 days from the date incurred (the date of the transaction, not the date the bill is received). A debt exceeding $500 must be reported in the report covering the date on which the debt was incurred.

Advances

When an individual uses personal funds (or personal credit) to pay for a party committee's expense, that payment is generally an in-kind contribution from that individual.

Although such expenses are considered in-kind contributions until reimbursed, special reporting rules apply when individuals pay for expenses and later receive reimbursement.