Treatment of Emergency Amendments: Paycheck Protection Program Liquidity Facility and Paycheck Protection Program Loans

Key dates

2020-04-27

NCUA published the interim final rule establishing the PPP risk-weighting, PPP Loan Facility total-asset exclusion, and commercial-loan treatment.

2022-01-01

NCUA’s 2015 risk-based capital final rule became effective; the December 2021 final rule had already carried forward the relevant PPP treatment into the then-current capital adequacy framework.

2026-11-04

The final rule adopting the April 27, 2020 IFR without change becomes effective and is published at 91 FR 69493.

Suggested considerations

• Compliance teams may wish to confirm that risk-based capital reporting continues to assign a 0 percent risk weight only to loans meeting the applicable SBA PPP eligibility and coverage criteria.
• Credit unions that pledged PPP loans to the Federal Reserve PPP Loan Facility may wish to verify that the loans remain appropriately identified and excluded from total assets solely for the net worth ratio calculation under 12 CFR 702.2.
• Regulatory reporting and finance teams may wish to reconcile PPP-loan classifications across the general ledger, capital calculations, Call Report processes, and supporting documentation.
• Lending compliance teams may wish to confirm that qualifying PPP loans are not included as commercial loans for purposes of 12 CFR part 723, while other applicable lending, documentation, servicing, SBA-guarantee, and record-retention requirements remain separately addressed.
• Credit unions may wish to retain evidence supporting SBA guarantees, facility pledges, non-recourse funding, and the basis for any regulatory capital exclusions, particularly where legacy PPP balances remain on the balance sheet.
• Policy owners may wish to update regulatory inventories to identify the 2026 rule as a finalization of the 2020 IFR rather than as a new operational requirement.

What changed

Under 12 CFR part 702, covered loans issued under the SBA Paycheck Protection Program continue to receive a 0 percent risk weight for risk-based capital purposes. PPP loans pledged as collateral for a non-recourse borrowing through the Federal Reserve’s PPP Loan Facility continue to be excluded from total assets when calculating the net worth ratio under 12 CFR 702.2. Under 12 CFR part 723, PPP loans remain excluded from the definition of commercial loans. The final rule adopts the April 27, 2020 IFR without change; NCUA states that the relevant treatment was already finalized or carried forward in its December 2021 capital adequacy rule, meaning the 2026 action largely confirms and preserves existing practice rather than introducing new requirements. Industry reporting characterized the a

Who is affected

• Federally insured credit unions
• Federal credit unions that originated or hold SBA Paycheck Protection Program loans
• Federally insured credit unions that participated in the Federal Reserve PPP Loan Facility
• State-chartered credit unions with federal share insurance

Related regulations

• 12 CFR 702
• 12 CFR 702.2
• 12 CFR 723
• Coronavirus Aid, Relief, and Economic Security Act
• 15 U.S.C. 636(a)(36)
• Section 13(3) of the Federal Reserve Act