The Federal Reserve Board ("FRB") modified the Paycheck Protection Program ("PPP") under the Small Business Act to allow bank executive officers, directors and principal shareholders to apply for PPP loans from related bank affiliates on behalf of small businesses they own. Under the interim final rule, the FRB will except PPP loans from the definition of "extension of credit" under Federal Reserve Act Section 22 and FRB Regulation O ("Loans to Executive Officers, Directors and Principal Shareholders of Member Banks").
The interim final rule is effective upon publication in the Federal Register. Comments must be submitted within 45 days after the date of publication in the Federal Register.
Primary Sources
- FRB Press Release: Federal Reserve Board announces rule change to bolster the effectiveness of the Small Business Administration's Paycheck Protection Program
- FRB Interim Final Rule: Loans to Executive Officers, Directors, and Principal Shareholders of Member Banks
Originally published April 21, 2020
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