WBA Expresses Support to Except PPP Loans From Reg O

In a comment letter filed yesterday, WBA expressed support over FRB’s actions to except PPP loans from Regulation O. Due to how the term “extension of credit” is defined in Regulation O, a PPP loan made by a bank to its insider would subject the loan to the regulation. This presents operational challenges for banks and borrowers to efficiently process PPP loans.

WBA stated appreciation of FRB’s recognition that PPP loan terms and program eligibility are established by SBA, the loans are fully guaranteed by SBA and backed by the United States, and present very little risk to the eligible lender making the loan. WBA also stated support for FRB’s actions to utilize its authority, pursuant to the Housing and Community Development Act, to except PPP loans from the restrictions of section 22(h) of the Federal Reserve Act and from the corresponding provisions of Regulation O in recognition of these factors.

WBA stated that removing Regulation O obstacles will allow Wisconsin’s banks to more efficiently address the needs of their small insider-owned businesses and would help ensure eligible businesses have timely access to liquidity sources to help overcome economic hurdles resulting from the effects of COVID-19.

Read the full comment letter here

By, Amber Seitz