NCUA Fourteenth Deregulation Proposals: PPP Loan Rule Made Permanent

• The NCUA announced two final rules and one interim final rule on November 3, 2026, as part of its ongoing Deregulation Project.
• A final rule makes permanent the regulatory treatment of Paycheck Protection Program (PPP) loans, which has been in effect since April 27, 2020.
• The agency also finalized an amendment to 12 CFR 701.39 by removing an unnecessary definition related to statutory liens.
• An interim final rule seeks to eliminate 12 CFR 723.9, an outdated transitional provision within the commercial lending regulation.
• These regulatory adjustments aim to reduce complexity and enhance clarity for credit unions, without altering statutory lien authority.

These regulatory adjustments, part of the NCUA's ongoing Deregulation Project, underscore the agency's commitment to refining its oversight framework while requiring credit unions to remain vigilant in adapting their internal policies.

The National Credit Union Administration (NCUA) unveiled its fourteenth series of regulatory adjustments on November 3, 2026, introducing two final rules and one interim final rule. These actions are integral to the NCUA's ongoing Deregulation Project, an initiative designed to continuously evaluate and refine the agency's regulations. The overarching goal of this project is to ensure that the regulatory framework effectively supports the safety, soundness, and resilience of credit unions across the nation.

This latest round of NCUA fourteenth deregulation proposals addresses several key areas impacting credit union operations. The changes include solidifying the treatment of Paycheck Protection Program (PPP) loans, streamlining aspects of commercial lending regulations, and clarifying provisions related to statutory liens. Each modification is intended to either reduce regulatory burdens or enhance the clarity of existing rules, reflecting the NCUA's commitment to an efficient and effective supervisory environment.

Among the significant updates, the NCUA Board has adopted a final rule that permanently establishes the regulatory treatment for Paycheck Protection Program loans. This decision, affecting 12 CFR Parts 702 and 723, codifies provisions that have been in continuous effect since April 27, 2020. These provisions were initially implemented during the height of the COVID-19 pandemic to facilitate the execution of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

The credit union PPP loan rule permanent status provides long-term certainty for financial institutions that participated in the program. By making these temporary measures permanent, the NCUA acknowledges the enduring impact of the PPP initiative and ensures a consistent regulatory approach for credit unions managing these loans. This final rule eliminates any ambiguity regarding the ongoing compliance requirements for PPP loan portfolios.

Further enhancing regulatory clarity, the NCUA has put forth an interim final rule aimed at removing an obsolete provision from its commercial lending regulations. This rule specifically targets 12 CFR 723.9, which served as a transitional measure when the principles-based commercial lending rule was introduced in 2016. Its original purpose was to accommodate credit unions operating under specific NCUA-approved waivers or supervisory actions during that transition period. The Board has now determined that this provision has fulfilled its intended function and is no longer necessary, making its 12 CFR 723.9 removal a step towards reducing regulatory complexity.

Concurrently, the Board also finalized an amendment to 12 CFR 701.39, which pertains to definitions related to statutory liens. This amendment involves the removal of paragraph (a)(1), a section that defined the phrase "except as otherwise provided by law or except as otherwise provided by federal law." The NCUA concluded that this definition was superfluous, given that credit unions inherently bear the responsibility of identifying and adhering to all applicable laws when exercising their statutory lien authority. This particular change does not alter a credit union's fundamental statutory lien authority or existing legal obligations, but rather streamlines the regulatory text.

These regulatory adjustments, part of the NCUA's ongoing Deregulation Project, underscore the agency's commitment to refining its oversight framework while requiring credit unions to remain vigilant in adapting their internal policies. For legal counsel and compliance officers within credit unions, a thorough review of these NCUA Deregulation Project updates is essential. Understanding the specific implications of the credit union PPP loan rule permanent status is critical for ongoing financial reporting and operational procedures.

Moreover, the 12 CFR 723.9 removal from the NCUA commercial lending regulation and the 12 CFR 701.39(a)(1) amendment regarding statutory liens necessitate careful attention. While these changes are designed to simplify and clarify, they still represent concrete shifts in the regulatory landscape that demand updated internal protocols and training. Ensuring full compliance with these updated provisions is paramount for maintaining institutional soundness and avoiding potential regulatory issues.

Credit union legal counsel and compliance officers must review these NCUA regulatory updates, particularly the permanent treatment of PPP loans and the removal of obsolete commercial lending and statutory lien provisions, to ensure their institutions maintain full compliance and adapt internal policies accordingly. These changes aim to reduce regulatory complexity, but require awareness of the specific amendments.

Source: Facts reported by the NCUA