CRA COVID FAQ 8: Consideration of Paycheck Protection Program (PPP) in Lending Distribution Evaluations

Question 8

How will 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?

Response 8

PPP loans in amounts of $1 million or less will be considered when evaluating a bank’s performance under the applicable retail lending test. This includes the evaluation of performance based on the distribution of loans inside and outside of its assessment areas, by business size based on gross annual revenues, and across geographies of different income levels. The agencies understand that this current environment presents unique challenges. Therefore, although performance may appear to be negatively affected, for example by a high level of out-of-assessment area lending, examiners will consider the information in context and evaluate it accordingly. That said, banks should continue to seek to meet the credit needs of their communities if making a significant amount of loans outside of their assessment areas.

Additionally, an examiner’s review of the borrower distribution of retail lending is typically focused on activities within a bank’s assessment area(s). However, as noted in Q&A __.22(b)(2) & (3)—4 (4) a bank may receive consideration for retail loans to low- or moderate-income individuals, small businesses, or small farms outside of their assessment area(s), provided that they have adequately addressed the needs of borrowers within their assessment area(s).

(4) See Interagency Questions and Answers Regarding Community Reinvestment, 81 Fed. Reg. 48506 (July 25, 2016).

Originally published in the “Community Reinvestment Act (CRA) Consideration for Activities in Response to the Coronavirus Pandemic Frequently Asked Questions (FAQs)” on May 27, 2020 and updated on March 8, 2021 by the Board of Govenors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency.

Last modified June 25, 2023