FED Extends Certain Relief Under Paycheck Protection Program to March
FED is temporarily modifying its rules with respect to the Paycheck Protection Program (PPP) to extend the date for allowing certain bank directors and shareholders to apply to their banks for PPP loans for their small businesses. FED, in April 2020 and July 2020, had issued two interim final rules to except such loans made through June 30, 2020 and August 8, 2020, respectively, from the existing requirements of section 22(h) of the Federal Reserve Act and FED's Regulation O. FED is now issuing this interim final rule to further extend this relief to PPP loans, including PPP second-draw loans, made through March 31, 2021. The rule change will be effective on the date of publication in the Federal Register while comments will be accepted for 45 days after its publication in the Federal Register.
This is the second FED-announced extension of the rule to bolster the effectiveness of the Paycheck Protection Program of SBA. Like the earlier extensions, this one will temporarily modify the FED rules so that certain bank directors and shareholders can apply to their banks for PPP loans for their small businesses. To prevent favoritism, FED limits the types and quantity of loans that bank directors, shareholders, officers, and businesses owned by these persons can receive from their affiliated banks. However, these limits have prevented some small business owners from accessing PPP loans—especially in rural areas. SBA had clarified last year that PPP lenders can make PPP loans to businesses owned by their directors and certain shareholders, subject to certain limits, and without favoritism. This rule extension will allow those individuals to apply for PPP loans, consistent with the rules and restrictions of SBA. The extension only applies to PPP loans. SBA has explicitly prohibited banks from prioritizing or providing favorable processing time to PPP loan applications from a director or equity holder and FED will administer the rule extension accordingly.
Related Links
Comment Due Date: FR + 45 Days
Effective Date: Date of Publication in FR
Keywords: Americas, US, Banking, COVID-19, Paycheck Protection Program, Small Business Administration, Credit Risk, Loan Guarantee, Regulatory Capital, Basel, FED
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Nick Jessop
Scenario modeling expert; risk management specialist; quantitative financial modeler
Previous Article
ESAs Respond to EC Proposal on DORA, Suggest ImprovementsRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
