Texas Department of Banking issues guidance on Main Street Lending Program and state lending limits

State Issues Covid-19 Texas Lending

The Texas Department of Banking issued guidance explaining the application of lending limits imposed on state chartered banks to loans issued under the Federal Reserve Bank of Boston’s Main Street Lending Program (“MSLP”). The guidance explains that if the bank funds a MSLP loan prior to seeking to sell a participation in the loan to the Department of the Treasury, the entire amount of the loan will count towards eligible lending limits. After the participation is sold, the portion of the loan sold need not be treated as a loan for purposes of lending limits. If the bank enters into a MSLP loan agreement, the funding of which is contingent on a binding commitment from the Treasury to purchase a participation in the loan, the bank need only include the portion of the loan to be retained when calculating lending limits.