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Business loans to Executive Officers

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  • #6487
    Evelyn
    Participant

    If an executive officer also has a business, are his/her business loans included in the $100,000 “other loans” restriction? I can see certain commentary that insinuates it is but not getting any clear substantiation.

    #6489
    rcooper
    Keymaster

    It depends on whether the loan is being made to: an EO, a partnership where the EO has a majority interest or a related interest.

    Regulation O, 12 CFR 215.5, sets forth additional limits on extensions of credit to Executive Officers, but not their related interests. These restrictions apply to a partnership where an EO holds a majority interest as stated in 215.5(b). Also, if the EO is guaranteeing a related interest loan that would be subject to the $100,000 due to 215.3(7).

    You’ll have a hard time finding anything that specifically spells this out other than the regulation and statute, but here is a link to the OCC Insider Handbook that has a statement agreeing with my opinion: https://www.occ.gov/publications/publications-by-type/comptrollers-handbook/_pdf/m-ia.pdf. See page 11.

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