FRB Modifies PPP to Allow for Certain Small Business Loans to Bank Officers, Directors and Shareholders
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.