FRB Extends PPP Exception For Bank Executives, Directors And Principal Shareholders

The Federal Reserve Board ("FRB") adopted an interim final rule to extend an exception for Paycheck Protection Program ("PPP") loans and second draw PPP loans filed through March 31, 2021 under FRB Regulation O ("Loans to Executive Officers, Directors, and Principal Shareholders of Member Banks"). 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 (see previous coverage) and then extended that exception (see previous coverage).

The FRB's action, as applied to PPP loans, was deemed to "pose minimal risk to bank safety and soundness" under Federal Reserve Act Section 375b(9)(D)(ii). The interim final rule is effective immediately. Comments may be submitted through April 5, 2021.