California Department of Social Services - State Hearings Division
Notes from the Training Bureau - April 14, 1997

Reference: MPP §§42-213.2c.(1), 44-111.437

Effective April 1, 1997, new regulations provide for the exemption of all bona fide loans from consideration as income or property in AFDC regardless of the source or intended purpose of the loan. All loans that have a written agreement with a clearly defined obligation to repay the funds are defined as bona fide loans and will not be counted in the AFDC eligibility or payment determination.

To be exempt, a loan must be in writing and be signed by both the lender and the applicant/recipient as parties to the agreement. The written agreement must clearly specify that the applicant/recipient has the obligation to repay the loan and must include a repayment plan which provides for installments of specified amounts which continue on a regular basis until the loan is fully repaid.