Reply To: Loan to Director


There isn’t an exception that I see for this in the definition of “extension of credit” or the general prohibitions. (See links below.)

I think if you can document that the rate is a result of the program and anyone qualifying for a loan under this program will/would receive the same rate it should be fine. Just make sure it is documented. For example, do you offer this program to non-insiders? If so, document that and the rates that are available to everyone as of the date the rate is set. Also, if you have any other non-insider loans through this program that you could use to do a comparison to show the rate or underwriting isn’t preferential that would be great for examiners to see?

Here’s a link to Reg O’s general probitions:

And the definition of extension of credit: