Q: PPP CRA Consideration. How will Paycheck Protection Program (PPP) loans be considered when evaluating the borrower and geographic distribution of loans and the distribution of loans inside and outside of bank assessment areas?
A: The CRA regulatory criteria for the service test do not include loan processing and servicing activities for retail loans originated by a bank. Additionally, the agencies generally consider building new lending platforms and technical assistance provided to borrowers during a loan application process to be activities that banks engage in during the normal course of doing business. Therefore, the agencies will not extend CRA service test consideration for PPP-related activities.
The agencies do recognize the Paycheck Protection loan program is responsive to community credit needs. Therefore, these activities will be considered under the CRA lending test when evaluating flexible or innovative lending programs offered by the bank.
This Q&A was contained in the Frequently Asked Questions for Financial Institutions Affected by the Coronavirus Disease 2019 (Referred to as COVID-19) – As of March 3, 2021 (which may be updated from time to time). This may be found on the FDIC’s website here: https://www.fdic.gov/Coronavirus/faq-fi.pdf.