Yes, we believe that PPP loans will be exempt from the national bank lending limits since they will be 100% guaranteed by the SBA.

The national bank lending limit regulations provide that loans guaranteed by federal agencies are exempt from the national bank lending limits to the extent of the guarantee, and the OCC confirmed that loans guaranteed by the SBA are included in this exemption in the supplementary information to its national bank lending limit rules. The OCC also has stated that the “federally guaranteed portion of a [SBA] 7(a) loan does not count toward a bank’s legal lending limit.”

Consequently, since 100% of PPP loans will be guaranteed by the SBA, we do not believe any portion of a PPP loan would be subject to the national bank lending limits.

For resources related to our guidance, please see:

• OCC Lending Limit Regulations, 12 CFR 32.3(c) (“The following loans or extensions of credit are not subject to the lending limits of 12 U.S.C. 84, or 12 U.S.C. 1464(u), as applicable, or this part.

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  (4)  Loans to or guaranteed by a Federal agency. (i) Loans or extensions of credit to any department, agency, bureau, board, commission, or establishment of the United States or any corporation wholly owned directly or indirectly by the United States.

(ii) Loans or extensions of credit, including portions thereof, to the extent secured by unconditional takeout commitments or guarantees of any of the foregoing governmental entities. The commitment or guarantee—

• (A) Must be payable in cash or its equivalent within 60 days after demand for payment is made;

• (B) Is considered unconditional if the protection afforded the national bank or savings association is not substantially diminished or impaired if loss should result from factors beyond the bank's or savings association's control. Protection against loss is not materially diminished or impaired by procedural requirements, such as an agreement to pay on the obligation only in the event of default, including default over a specific period of time, a requirement that notification of default be given within a specific period after its occurrence, or a requirement of good faith on the part of the bank or savings association.”)

• Final Rule, OCC, Lending Limits, 60 Fed. Reg. 8526, 8530 (February 15, 1995) (“Section 32.3(c)(3) is revised in the final rule. This paragraph provides that loans collateralized by U.S. government obligations are exempt from the lending limits to the extent of the current market value of the collateral. This exemption includes loans that are secured by bonds, notes, Treasury bills, or similar obligations fully guaranteed as to principal and interest by the full faith and credit of the United States Government. . . . [T]he final rule relies on the OCC’s authority under 12 U.S.C. 84(d)(1) to establish limits or requirements other than those specified in the statute, for particular classes or categories of loans, to include an additional class of loans in the exempt category—loans guaranteed as to repayment of principal by the full faith and credit of the U.S. Government. This exemption includes qualifying Small Business Administration, Federal Housing Administration, and Veterans Administration guaranteed loans, but only to the extent of the government guarantee.”)

• OCC Community Development Insights, Bankers’ Guide to the SBA 7(a) Loan Guaranty Program (December 2014) (“The federally guaranteed portion of a 7(a) loan does not count toward a bank’s legal lending limit. For example, if a bank’s legal lending limit is $1 million, the bank can make a 7(a) loan above that amount with a 75 percent guaranty because the guaranteed portion is not included in the limit.”)