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https://youtu.be/CMLQrqYheiY?t=88

In this video, Poilievre describe that large loans are used for companies to give large donations to politicians, these large loans are never to be paid back and are used to circumvent laws regarding political contribution in Canada. I am wondering if this exploit also exists in the United States currently.

Can large loans be used by companies to circumvent political contribution laws in the United States?

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    Given the much weaker limits in the US, such subterfuges seem unnecessary. There are super PACs and the like. Sep 25, 2022 at 19:05
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    Note that the video is from 2014 and the "loophole" had since been closed (which was, among others that many consider more problematic, the subject of Poilievre's bill).
    – xngtng
    Sep 26, 2022 at 13:32

1 Answer 1

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In theory, no, loans from companies (other than banks) cannot plausibly be used like that because they immediately count against the (direct) contribution limit. The FEC says:

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.

[...] Special reporting rules apply to loans, debts and advances.

Generally speaking, banking regulations should prevent abusing the latter, i.e. unrefunded loans from banks. The FEC also has this footnote on the latter:

In determining whether credit was extended in the ordinary course of business, the Commission will consider

  • Whether the commercial vendor followed its established procedures and its past practice in approving the extension of credit;

  • Whether the commercial vendor received prompt payment in full if it previously extended credit to the same candidate or political committee; and

  • Whether the extension of credit conformed to the usual and normal practice in the commercial vendor's trade or industry.

[citing] 11 CFR 116.3(c).

They also have a more detailed page on bank loans with additional rules, of which this one seems worth noting:

An endorsement or guarantee of a bank loan is considered a contribution by the endorser or guarantor and is thus subject to the law’s prohibitions and limits on contributions.


But in the US, super PACs are by far the more common method to circumvent direct contribution limits in the US, I think, which makes other subterfuges rather redundant. Super PACs allow receipt of unlimited contributions as long as they are formally not controlled by the candidate(s). Mind you, independence here doesn't seem to extend even to the party, so, according to the Brennan Center:

The biggest-spending super PACs in congressional elections are run by top staff of party leaders and carefully align their spending with the parties. All of this allows candidates and their wealthiest supporters to circumvent limits on contributions to candidates and parties.

We're getting a bit off-topic, but if you're curious what independence means, it seems the staffers who run the super PAC need to formally resign their party [jobs] 120 days prior. On the other hand, the candidates themselves can freely attend and give speeches at the super PACs' fundraising events.

But speaking of loans (again), it's also possible in the US for candidates themselves to loan their campaign apparently any amount of money, and to recoup it in "post-election fundraising", although individual contributor limits do apply to the latter phase; there also used to be a limit on the total amount that could be recouped by the candidate like that, but was struck down by the Supreme Count in 2022, just like super PACs were green-lit by a SCOTUS decision in 2010.

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