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Financial Services Law Insights and Observations

Fed extends temporary exception to allow bank insiders access to PPP

Federal Issues Federal Reserve Agency Rule-Making & Guidance SBA CARES Act Small Business Lending Covid-19

Federal Issues

On July 15, the Federal Reserve Board adopted an interim final rule (IFR) extending a temporary exception from the requirements of section 22(h) of the Federal Reserve Act and corresponding provisions of Regulation O for certain loans guaranteed under the Small Business Administration’s Paycheck Protection Program (PPP). The IFR extends the exception to August 8—the new date on which the PPP is set to expire (covered by InfoBytes here). The original extension was announced on April 17 (covered by InfoBytes here) and permits banks to extend credit to bank insiders, but only for PPP loans. However, the IFR does not except a PPP loan from other restrictions that may apply, including those under section 22(g) the Federal Reserve Act, section 215.5 of Regulation O, or applicable SBA PPP lending restrictions. The IFR takes effect immediately, and comments will be accepted for 45 days after publication in the Federal Register.