Regulatory Capital Rule: Paycheck Protection Program Lending Facility and Paycheck Protection Program Loans

Title: Regulatory Capital Rule: Paycheck Protection Program Lending Facility and Paycheck Protection Program Loans
Subject: Capital; member business lending
Agency: NCUA
Status: Interim final rule; request for comments
Summary:
The NCUA Board (Board) is issuing this interim final rule to make a conforming amendment to its capital adequacy regulation following the enactment of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The CARES Act authorizes the Small Business Administration to create a loan guarantee program, the Paycheck Protection Program (PPP), to help certain businesses affected by the COVID-19 pandemic. The CARES Act requires that PPP loans receive a zero percent risk weighting under the NCUA’s risk-based capital requirements. To reflect the statutory requirement, the interim final rule amends the NCUA’s capital adequacy regulation to provide that covered PPP loans receive a zero percent risk weight. The interim final rule also provides that if the covered loan is pledged as collateral for a non-recourse loan that is provided as part of the Board of Governors of the Federal Reserve System’s (FRB) PPP Lending Facility, the covered loan can be excluded from a credit union’s calculation of total assets for the purposes of calculating its net worth ratio. The interim final rule also makes a conforming amendment to the definition of commercial loan in the NCUA’s member business loans and commercial lending rule. The Board has found good cause to issue the interim final rule without advance notice-and-comment procedures and with an effective date upon publication.
Date proposed:
Comments due date: May 27, 2020
Effective date:

April 21, 2020

Rule compliance date:
Agency release:

Related Reg Report item(s):

Credit union regulator gives PPP loans 0% risk weight – and the loans won’t count against business lending cap

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