Question

The minimum loan amount a plan may establish by policy is:

a. $500
b. $1,000
c. $10,000
d. There is no minimum amount.

Answer 1

The typical minimum loan amount that a plan may establish by policy is $1,000, set to maintain a balance between processing costs and the loan amount. The option (B) is correct.

Step-by-step explanation:

The minimum loan amount that a plan may establish by policy is $1,000. This stems from various regulatory guidelines and standard practices among financial institutions to balance the cost of processing loans with the amounts borrowed.

While some plans may allow for smaller loans, $1,000 serves as a typical lower boundary to ensure efficient operation. Therefore, option (B) is correct.