A Federal Reserve Board ("FRB") interim final rule to further extend an exception for Paycheck Protection Program ("PPP") loans and second draw PPP loans filed from March 31, 2021 through March 31, 2022 under FRB Regulation O ("Loans to Executive Officers, Directors, and Principal Shareholders of Member Banks") was published in the Federal Register. The interim final rule went into effect on May 21, 2021 and comments on the interim final rule must be received by July 6, 2021.
The FRB issued the exception to allow bank executive officers, directors and principal shareholders to apply for PPP loans from related bank affiliates on behalf of the small businesses they own. The FRB has twice extended this exception. The FRB's action, as applied to PPP loans, was deemed to "pose minimal risk to bank safety and soundness" under Section 375b(9)(D)(ii) ("Exceptions") of the Federal Reserve Act.
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