John Zasada, Compliance Consulting Director, Financial Institutions Group

On April 17, 2020, the Federal Reserve (Fed) issued an interim final rule permitting Paycheck Protection Program (PPP) loans to be made to bank insiders and not be in violation of Regulation O.

Regulation O imposes certain restrictions on the loans bank directors and officers can receive from their bank. These restrictions have prevented some business owners from obtaining PPP loans. Because the Fed believes PPP loans pose minimal risks, it is excluding them from the definition of “extension of credit” and the corresponding requirements in Regulation O. Of course, any business owners applying for a PPP loan are subject to the Small Business Administration’s rules and restrictions.

Contact Doeren Mayhew’s regulatory compliance specialists with any questions.