Fed issues rule to temporarily allow bank insiders access to PPP

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

On April 17, the Federal Reserve Board (Fed) announced an interim final rule to allow “certain bank directors and shareholders” to apply for loans from the Small Business Administration’s (SBA) Paycheck Protection Program (PPP). The rule will temporarily suspend some of the requirements of Federal Reserve Act Section 22(h) and Regulation O, to permit banks to extend credit to bank insiders, but only for PPP loans. This announcement comes after the SBA recently issued its own interim final rule regarding eligibility of directors and shareholders to apply for PPP loans for their own small businesses. The Fed’s interim final rule is effective upon publication in the Federal Register and comments must be received within 45 days of publication.