The Federal Reserve Board announced a temporary rule change to support access to the SBA Paycheck Protection Program for certain bank directors and shareholders. The SBA recently clarified that lenders may make PPP loans to businesses owned by their directors and shareholders that own less than 30 percent equity in the bank
The Fed's change will allow those individuals to apply for PPP loans under Fed regulations, consistent with SBA's rules and restrictions. Specifically, these PPP loans will not be subject to section 22(h) or the corresponding provisions of Regulation O if they are not prohibited by the SBA lending restrictions.
The change only applies to PPP loans, will be in place while the PPP is active, and is effective immediately. Comments will be accepted for 45 days after publication in the Federal Register.