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Home > News & Events > Press Releases

Joint Press Release
February 05, 2010

Regulators Issue Statement on Lending to
Creditworthy Small Businesses
Board of Governors of the Federal Reserve System
Federal Deposit Insurance Corporation
National Credit Union Administration
Office of the Comptroller of the Currency
Office of Thrift Supervision
Conference of State Bank Supervisors
For immediate release
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The federal financial regulatory agencies and the Conference of State
Bank Supervisors (the regulators) issued a statement today on prudent
lending to creditworthy small business borrowers.1 The regulators
recognize that small businesses play an important role in the economy
and know that some are experiencing difficulty in obtaining or renewing
credit.
The statement emphasizes that financial institutions that engage in
prudent small business lending after performing a comprehensive review
of a borrower's financial condition will not be subject to supervisory
criticism for small business loans made on that basis. Financial
institutions should understand the long-term viability of the borrower's
business and focus on the strength of a borrowers' business plan to
manage risk rather than using portfolio management models that rely
primarily on general inputs, such as a borrower's geographic location or

industry.
The regulators are working with the industry and supervisory staff to
ensure that supervisory policies and actions do not inadvertently curtail
the availability of credit to sound small business borrowers. The
statement builds upon principles in existing guidance, including the
Interagency Statement on Meeting the Needs of Creditworthy
Borrowers2 issued in November 2008 and the Policy Statement on
Prudent Commercial Real Estate Loan Workouts3 issued in October
2009.
Attachment: Interagency Statement on Meeting the Credit Needs of
Creditworthy Small Business Borrowers (38 KB PDF)

1. Financial institutions should apply the principles of this statement in
accordance with their internal definitions of small business loans or as
appropriate in their loan portfolios. Small business lending includes
loans to small businesses and farms, such as working capital lines of
credit, secured and unsecured term loans, as well as unsecured
revolving credit. Return to text
2.
http://www.federalreserve.gov/newsevents/press/bcreg/20081112a.htm
Return to text
3. http://www.ffiec.gov/press/pr103009.htm Return to text

Media Contacts:
Federal Reserve
Board
FDIC
OCC
NCUA
OTS
CSBS

Barbara
Hagenbaugh

202-4522955
202-898David Barr
6992
202-874Dean DeBuck
5770
703-518Cherie Umbel
6337
202-906William Ruberry
6677
202-728Catherine Woody
5733

Last Update: February 05, 2010

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