Lending Limit Relief under the CARES Act

Banking & Financial Institutions COVID-19 Resources

Section 84 of Title 12 of the United States Code sets forth lending limits applicable to national banks. The maximum amount of credit outstanding by a national bank or federal thrift to any one borrower is limited to 15% of the bank’s unimpaired capital and surplus, plus an additional 10% of the bank’s unimpaired capital and surplus for extensions of credit that are fully secured by marketable collateral. These general limits are implemented by Office of the Comptroller of the Currency (OCC) regulations.

Section 4011 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) authorizes the OCC to use its exemption authority under the loans-to-one-borrower statute to exempt loans or other extensions of credit to any non-bank financial entity, in addition to providing such exemptions to financial institutions, from the loans-to-one-borrower aggregate limits. These provisions are effective until December 31, 2020, or at the conclusion of the Covid-19 public health emergency, whichever occurs first.

Lending limits for North Carolina state-chartered banks are found in section 53C-6-1 of the North Carolina General Statutes. These state-mandated limits mirror the limits described above for national banks and reference the amounts permitted for national banks by statute or regulation of the OCC. As such, the CARES Act changes to the national bank statute will also apply to North Carolina state-chartered banks.

As of April 1, 2020, the OCC has not promulgated any rules under this new exemptive authority.