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Advanced Search About the Fed News & Events Monetary Policy Supervision & Regulation Payment Systems Economic Research Data Consumers & Communities Board of Governors of the Federal Reserve System The Federal Reserve, the central bank of the United States, provides the nation with a safe, flexible, and stable monetary and financial system. 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 Share 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 BOARD OF GOVERNORS of the FEDERAL RESERVE SYSTEM About the Fed News & Events Monetary Policy Supervision & Regulation Payment Systems Economic Research Data Consumers & Communities Financial Stability TOOLS AND INFORMATION STAY CONNECTED Contact Publications Freedom of Information (FOIA) Office of Inspector General Budget & Performance | Audit No FEAR Act Español Website Policies | Privacy Program Accessibility BOARD OF GOVERNORS of the FEDERAL RESERVE SYSTEM 20th Street and Constitution Avenue N.W., Washington, DC 20551