*The amount is the lesser of 50% of the vested account balance or $50,000 reduced by the highest outstanding loan balance during the last 12 months. Since the participant had an outstanding loan in the last 12 months and a vested account balance of over $100,000, the new loan may not exceed $50,000 less the highest outstanding loan in the last 12 months.

Example 2

Assume everything is the same as Example 1 except that in addition to loans 1 and 2, the participant has unexpected expenses and needs to apply for a third loan on 04/15/06.  The participant is requesting the maximum available amount on 04/15/06, what is that amount?

Loan Origination Date

08/19/09

12/23/09

04/15/10

Loan Amount Request

$20,000

$10,000

Maximum available

Highest Outstanding Loan Balance  (on any given day) in the Last 12 Months Prior to 04/15/06 Occurred on 12/23/05

$19,120.00**

$10,000

N/A

Maximum Available Loan Amount on 4/15/06

$20,000

$10,000

$50,000 less ($19,120 plus $10,000) =
$50,000 less $29,120 = $20,880***

  ** The $20,000 reduced by loan repayments to $19,120 as of 12/23/09 when the second loan is at its highest principal amount.

 *** Note:  Although the two highest outstanding loan balances during the last 12 months were $20,000 and $10,000 respectively, the rule asks for the highest outstanding balance on any one day during the last 12 months.  Thus, we resist the impulse to simply add highest outstanding balances of $20,000 and $10,000 (which would give the highest loan amounts made during the last 12 months).  Instead, we must use the one day during the year that would reflect the highest outstanding balance of all the loans when combined together on that one day.