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April 6, 2020 | Legal Update

The Massachusetts Division of Banks has issued guidance that grants immediate supervisory relief to Massachusetts-chartered banks from statutory lending limits on loans to one borrower for loans made pursuant to the U.S. Small Business Administration’s (SBA’s) “Paycheck Protection Program” established by the Coronavirus Aid, Relief, and Economic Security Act. The guidance released on April 6, Industry Guidance Regarding U.S. Small Business Administration’s Paycheck Protection Program (PPP) and Legal Lending Limits for Massachusetts Chartered Banks and Credit Unions, clarifies that the Division will not consider loans made under the PPP as “the basis for an adverse regulatory finding or enforcement action for violation of the legal lending limit” by a Massachusetts-chartered bank. To the extent that a PPP loan is made as an exception to the bank’s own internal lending limits, established by the bank’s policies, the Division will also not criticize such an exception-to-policy loan in the findings of an examination, according to the new guidance. The Division cautioned banks that the supervisory exception to the legal lending limit announced in the new guidance has been granted specifically for loans made under the PPP, and only applies to the extent of the amount of any PPP loan. Click here for a copy of the Division’s new guidance to Massachusetts-chartered banks.

Nutter Notes: In its guidance, the Division also encouraged banks to consider collaborating with other lenders to meet small business demand for PPP loans. The guidance suggests that banks already engaged in processing PPP loans consider reaching out to other Massachusetts lenders that may have little to no SBA experience to pursue opportunities to extend access to the PPP, such as referral arrangements for PPP applicants.

Nutter Bank Report
Nutter Bank Report is a monthly electronic publication of the Banking and Financial Services Group of the law firm of Nutter McClennen & Fish LLP. Chambers and Partners, the international law firm rating service, after interviewing our clients and our peers in the profession, has ranked Nutter’s Banking and Financial Services practice among the top banking practices in the nation. Visit the U.S. rankings at Chambers.com. The Nutter Bank Report is edited by Matthew D. Hanaghan. Assistance in the preparation of this issue was provided by Heather F. Merton. The information in this publication is not legal advice. For further information, contact:

Thomas J. Curry tcurry@nutter.com Tel: (617) 439-2087

Kenneth F. Ehrlich kehrlich@nutter.com Tel: (617) 439-2989

Michael K. Krebs mkrebs@nutter.com Tel: (617) 439-2288

This update is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered as advertising.