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Non-purpose Loan

Definition
General-purpose loan collateralized with securities. Normally an investment bank can lend up to 90 percent of the collateral value of the securities, provided the loan proceeds are not used for buying more securities. Otherwise (under Federal Regulation T) only 50 percent of the collateral value can be lent and (under Federal Regulation U) the borrower must submit an affidavit (purpose statement) disclosing the purpose of the loan.

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