Member Business Loans; Commercial Lending

Issuing agencies

Abstract

The NCUA Board (Board) is amending its regulations governing member business loans and commercial lending. This interim final rule eliminates an outdated, transitional provision that is no longer necessary. This action is necessary to reduce regulatory complexity and improve the clarity of the NCUA's regulations. The intended effect is to enhance clarity and simplify compliance for federally insured credit unions (FICUs).

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<title>Federal Register, Volume 91 Issue 212 (Wednesday, November 4, 2026)</title>
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[Federal Register Volume 91, Number 212 (Wednesday, November 4, 2026)]
[Rules and Regulations]
[Pages 69495-69498]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-22537]


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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 723

RIN 3133-AG12


Member Business Loans; Commercial Lending

AGENCY: National Credit Union Administration (NCUA)

ACTION: Interim final rule; request for comments.

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SUMMARY: The NCUA Board (Board) is amending its regulations governing 
member business loans and commercial lending. This interim final rule 
eliminates an outdated, transitional provision that is no longer 
necessary. This action is necessary to reduce regulatory complexity and 
improve the clarity of the NCUA's regulations. The intended effect is 
to enhance clarity and simplify compliance for federally insured credit 
unions (FICUs).

DATES: This rule is effective on November 4, 2026. Comments must be 
received on or before January 4, 2027.

DATES: Comments may be submitted in one of the following ways. (Please 
send comments by one method only):
    <bullet> Federal eRulemaking Portal: <a href="https://www.regulations.gov">https://www.regulations.gov</a>. 
The docket number for this rule is NCUA-2026-

[[Page 69496]]

1884. Follow the ``Submit a comment'' instructions. If you are reading 
this document on <a href="http://federalregister.gov">federalregister.gov</a>, you may use the green ``SUBMIT A 
PUBLIC COMMENT'' button beneath this rulemaking's title to submit a 
comment to the <a href="http://regulations.gov">regulations.gov</a> docket. A plain language summary of the 
rule is also available on the docket website.
    <bullet> Mail: Address to Melane Conyers-Ausbrooks, Secretary of 
the Board, National Credit Union Administration, 1775 Duke Street, 
Alexandria, Virginia 22314-3428.
    <bullet> Hand Delivery/Courier: Same as mailing address. Mailed and 
hand-delivered comments must be received by the close of the comment 
period.
    Mailed and hand-delivered comments must be received by the close of 
the comment period.
    Public inspection: Please follow the search instructions on <a href="https://www.regulations.gov">https://www.regulations.gov</a> to view the public comments. Do not include any 
personally identifiable information (such as name, address, or other 
contact information) or confidential business information that you do 
not want publicly disclosed. All comments are public records; they are 
publicly displayed exactly as received and will not be deleted, 
modified, or redacted. Comments may be submitted anonymously. If you 
are unable to access public comments on the internet, you may contact 
the NCUA for alternative access by calling (703) 518-6540 or emailing 
<a href="/cdn-cgi/l/email-protection#246b636769454d48644a4751450a434b52"><span class="__cf_email__" data-cfemail="4c030b0f012d25200c222f392d622b233a">[email&#160;protected]</span></a>.

FOR FURTHER INFORMATION CONTACT: Office of Examination and Insurance: 
Naghi Khaled, Associate Director, the Office of Examination and 
Insurance, at (703) 518-6360 or at 1775 Duke Street, Alexandria, VA 
22314. Office of General Counsel: Ariel Woodard-Stephens, Staff 
Attorney, Office of General Counsel, at (703) 518-6540 or at the above 
address.

SUPPLEMENTARY INFORMATION:

I. Introduction

A. Background

    The Board is publishing this interim final rule (IFR) amending its 
regulations at 12 CFR part 723, which governs member business loans and 
commercial lending for FICUs. This part establishes the safety and 
soundness standards FICUs must adopt for their commercial lending 
programs and implements the statutory limits on the aggregate amount of 
member business loans a credit union may hold, as established by the 
Federal Credit Union Act (FCU Act). The Board's statutory authority for 
this part is derived from several provisions of the FCU Act, including 
12 U.S.C. 1756, 1757, 1757A, 1766, 1785, and 1789.
    On March 14, 2016, the Board published a final rule that 
substantially revised part 723.\1\ The primary purpose of the 2016 
rulemaking, which was part of the NCUA's Regulatory Modernization 
Initiative, was to modernize the agency's regulation of member business 
lending by shifting from a prescriptive, rules-based framework to a 
broad, principles-based regulatory approach. The prior rule included 
prescriptive requirements and limitations related to collateral, 
security, equity, and loan amounts. The Board determined that this 
approach caused credit unions to manage their lending practices based 
on rigid regulatory restrictions rather than on sound, individualized 
risk management practices. Furthermore, the prior rule's associated 
waiver process had become burdensome for both credit unions and the 
NCUA, requiring significant time and resources and sometimes preventing 
credit unions from acting on borrower applications in a timely manner.
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    \1\ 81 FR 13554.
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    The 2016 final rule was designed to provide FICUs with greater 
flexibility and individual autonomy to safely and soundly offer 
commercial loans to their members. It eliminated many of the 
prescriptive requirements and the associated waiver process, focusing 
instead on broad principles that clarified regulatory expectations for 
safe and sound commercial lending. To facilitate the shift, the 2016 
final rule included transitional provisions at Sec.  723.9, which 
became generally effective on January 1, 2017. This section was 
intended to govern circumstances where, at the time the new rule took 
effect, a FICU was operating under a waiver approved by the NCUA or was 
subject to an enforcement constraint related to its commercial lending 
activities.
    Section 723.9(a) addresses previously approved waivers. Because the 
2016 rule eliminated the prescriptive requirements for which waivers 
were typically granted, it rendered most such waivers moot as of the 
effective date. The provision established a specific exception, 
however, for waivers that had been granted for borrowing relationship 
limits. These specific waivers were grandfathered, allowing the 
existing debt relationship to continue, but prohibited any increase in 
the debt associated with those relationships.
    Section 723.9(b) addresses ongoing enforcement constraints. This 
provision clarified that any limitations or other conditions imposed on 
a FICU through a written directive from the NCUA, such as a Document of 
Resolution or a Letter of Understanding and Agreement, were unaffected 
by the adoption of the new part. All such pre-existing constraints were 
to remain in place until formally modified or removed by the NCUA.

B. Legal Authority

    The Federal Credit Union (FCU) Act grants the Board a broad mandate 
to issue regulations governing both insured federal and state-chartered 
credit unions. Section 120 of the FCU Act is a general grant of 
regulatory authority, and it authorizes the Board to prescribe 
regulations for the administration of the FCU Act. Section 209 of the 
FCU Act is a plenary grant of regulatory authority to the NCUA to issue 
regulations necessary or appropriate to carry out its role as share 
insurer for all insured credit unions.

II. Discussion of the Interim Final Rule

    The Board now amends its commercial lending regulations by removing 
the transitional provisions at Sec.  723.9, which was intended to 
provide a clear and orderly transition from the former framework to the 
current principles-based approach to commercial lending. Paragraph (a) 
of the section rendered most pre-2017 waivers moot while grandfathering 
certain borrowing relationship waivers. Paragraph (b) clarified that 
existing enforcement constraints remained in effect. The circumstances 
this section was designed to address are no longer relevant to the 
ongoing operations of FICUs. The continued presence of this historical 
text in the Code of Federal Regulations (CFR) serves no practical 
function. The Board notes that any outstanding loans that were 
grandfathered remain grandfathered. As such, the Board finds that Sec.  
723.9 has served its purpose and is now outdated and requests comment 
on its removal from the CFR.

III. Regulatory Procedures

A. Administrative Procedure Act

    The Administrative Procedure Act (APA) authorizes agencies to issue 
regulations without notice and public comment when an agency finds for 
good cause (and incorporates the finding and a brief statement of 
reasons thereof in the rules issued) that notice and comment is 
``impracticable, unnecessary, or contrary to the public interest.'' \2\ 
With respect to the ``unnecessary'' prong of the good cause exception, 
courts have generally held that its use is ``confined to those

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situations in which the administrative rule is a routine determination, 
insignificant in nature and impact, and inconsequential to the industry 
and to the public.'' \3\ The Board has determined that this rulemaking 
to remove an obsolete provision is exempt from the APA's notice and 
comment requirement.
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    \2\ 5 U.S.C. 553(b)(B).
    \3\ Mack Trucks, Inc. v. EPA, 682 F.3d 87, 93 (DCCir. 2012) 
(citing South Carolina v. Block, 558 F.Supp. 1004, 1016 
(D.S.C.1983)).
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    Circumstances warrant publishing the removal of Sec.  723.9 as an 
interim final rule. Effective January 1, 2017, Sec.  723.9 was intended 
to govern circumstances where a FICU was operating under a waiver 
approved by the NCUA at the time the new rule took effect or was 
subject to an enforcement constraint related to its commercial lending 
activities.\4\ Section 723.9(a) addresses previously approved waivers 
and (b) governs enforcement. Because the 2016 rule eliminated the 
prescriptive requirements for which waivers were typically granted, it 
rendered most such waivers moot as of the effective date.\5\ At 
present, this transitional provision has been in place for eight 
years.\6\
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    \4\ 81 FR 13554 (Mar. 14, 2016).
    \5\ The Board notes that any outstanding loans that were 
grandfathered remain grandfathered.
    \6\ During this time, most commercial loans from 2017 would have 
been refinanced during the COVID-19 emergency's historical lowering 
of rates. See Federal Funds Effective Rate (FEDFUNDS) [verbar] FRED 
[verbar] St. Louis Fed. On March 13, 2020, President Trump issued 
Proclamation 9994 ``Declaring a National Emergency Concerning the 
Novel Coronavirus Disease (COVID-19) Outbreak. 85 FR 15337. In April 
2020, the unemployment rate reached 14.8 percent--the highest rate 
observed since data collection began in 1948. In July 2021, 
unemployment remained higher (5.4 percent) than it had been in 
February 2020 (3.5 percent). See ``Unemployment Rates During the 
COVID-19 Pandemic'' (2025), <a href="https://www.congress.gov/crs_external_products/R/PDF/R46554/R46554.9.pdf">https://www.congress.gov/crs_external_products/R/PDF/R46554/R46554.9.pdf</a>.
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    In consultation with our regions, the Board renders this provision 
obsolete. Accordingly, the Board finds good cause exists to forego pre-
promulgation notice and comment and issue this IFR. However, the Board 
seeks public comment on the removal of Sec.  723.9 and will carefully 
consider each comment received to determine whether further changes are 
needed.

B. Providing Accountability Through Transparency Act of 2023

    The Providing Accountability Through Transparency Act of 2023 (Act) 
requires that a notice of proposed rulemaking includes the internet 
address of a summary of not more than 100 words in length of a proposed 
rule, in plain language, that shall be posted on the internet website 
under section 206(d) of the E-Government Act of 2002 (commonly known as 
<a href="http://regulations.gov">regulations.gov</a>).\7\ The Act, under its terms, applies to notices of 
proposed rulemaking and does not expressly include other types of 
documents that the Board publishes voluntarily for public comment, such 
as notices and interim-final rules that request comment despite 
invoking ``good cause'' to forgo such notice and public procedure. As 
stated previously, this rulemaking is not subject to notice and comment 
as it removes an obsolete provision, and the Board will not issue a 
notice of proposed rulemaking. Nevertheless, to promote consistency and 
transparency, the Board is providing a plain language summary that 
meets the Act's requirements.
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    \7\ 5 U.S.C. 553(b)(4); 44 U.S.C. 3501 note.
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    In summary, the Board is amending its regulations governing member 
business loans and commercial lending by eliminating an obsolete 
transitional provision.
    The rule and required summary can be found at <a href="https://www.regulations.gov">https://www.regulations.gov</a>.

C. Executive Order 12866, 13563, and 14192

    Pursuant to Executive Order 12866 (``Regulatory Planning and 
Review''), a determination must be made whether a regulatory action is 
significant and therefore subject to review by the Office of 
Information and Regulatory Affairs (OIRA), within the Office of 
Management and Budget (OMB) in accordance with the requirements of the 
Executive Order.\8\ Executive Order 13563 (``Improving Regulation and 
Regulatory Review'') supplements and reaffirms the principles, 
structures, and definitions governing contemporary regulatory review 
established in Executive Order 12866.\9\ This interim final rule was 
drafted and reviewed in accordance with Executive Order 12866 and 
Executive Order 13563. OIRA has determined that this interim final rule 
is not a ``significant regulatory action'' as defined by section 3(f) 
of Executive Order 12866.
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    \8\ 58 FR 51735 (Oct. 4, 1993).
    \9\ 76 FR 3821 (Jan.21, 2011).
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    Executive Order 14192 (``Unleashing Prosperity Through 
Deregulation'') requires that any new incremental costs associated with 
new regulations shall, to the extent permitted by law, be offset by the 
elimination of existing costs associated with at least 10 prior 
regulations.\10\ This interim final rule is not an Executive Order 
14192 regulatory action because this rule is not significant under 
Executive Order 12866.
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    \10\ 90 FR 9065 (Feb. 6, 2025).
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D. The Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) requires that special 
consideration be given to the effects of regulations on small 
entities.\11\ When an agency engages in notice and comment rulemaking 
or is required to publish a Notice of Proposed Rulemaking it must 
prepare a regulatory flexibility analysis describing the impact of the 
rule on small entities unless the agency certifies that the rule will 
not have a significant economic impact on a substantial number of small 
entities. If the agency makes such a certification, it shall publish 
the certification at the time of publication of either the proposed 
rule or the final rule, along with a statement providing the factual 
basis for such certification.
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    \11\ 5 U.S.C. 601-612.
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    As previously discussed, consistent with the APA, the Board has 
determined that general notice and opportunity for public comment does 
not apply to the removal of Sec.  723.9's obsolete transition 
provision.\12\ Rules that are exempt from notice and comment procedures 
are also exempt from RFA requirements, including conducting a 
regulatory flexibility analysis, when among other things the agency for 
good cause finds that notice and public procedure are impracticable, 
unnecessary, or contrary to the public interest. Accordingly, the Board 
has concluded that the RFA's requirements relating to initial and final 
regulatory flexibility analysis do not apply.
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    \12\ 5 U.S.C. 553(b)(B).
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    The Board, however, has elected to address the Act's requirement in 
the interests of administrative consistency and transparency. For 
purposes of this analysis, the NCUA considers small credit unions to be 
those having under $100 million in assets. Accordingly, the NCUA 
certifies the proposed rule would not have a significant economic 
impact on a substantial number of small credit unions.

E. The Paperwork Reduction Act of 1995

    The Paperwork Reduction Act of 1995 (PRA) generally provides that 
an agency may not conduct or sponsor, and not withstanding any other 
provision of law, a person is not required to respond to a collection 
of information, unless it displays a currently valid OMB control 
number. The PRA applies to rulemakings in which an agency creates a new 
or amends existing information collection requirements. For purposes of 
the PRA, an information-collection requirement may take the form of 
reporting, recordkeeping, or a third-party disclosure requirement. The

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member business loan information collection is assigned OMB Control 
Number 3133-0101. This rule does not revise OMB Control Number 3133-
0101.

F. Executive Order on Federalism

    Executive Order 13132 encourages certain agencies to consider the 
impact of their actions on state and local interests. The NCUA, an 
agency as defined in 44 U.S.C. 3502(5), complies with the executive 
order to adhere to fundamental federalism principles. The IFR does not 
have substantial direct effects on the states, on the relationship 
between the federal government and the states, or on the distribution 
of power and responsibilities among the various levels of government. 
While the rule applies to federally insured, state-chartered credit 
unions, its goal is to eliminate an outdated provision. The Board does 
not anticipate any impact on state-chartered credit unions and state 
regulators but welcomes comments on this issue.

G. Assessment of Federal Regulations and Policies on Families

    The NCUA has determined that this rule will not affect family well-
being within the meaning of Section 654 of the Treasury and General 
Government Appropriations, 1999. The proposed rule merely removes 
obsolete regulatory provisions.

F. Congressional Review Act

    Subtitle E of the Small Business Regulatory Enforcement Fairness 
Act of 1996 (also known as the Congressional Review Act or CRA) 
generally provides for congressional review of agency rules.\13\ NCUA 
must submit a report to Congress and the Comptroller General when it 
issues a final rule, as defined by the CRA.\14\ An agency rule, in 
addition to being subject to congressional oversight, may also be 
subject to a delayed effective date if the rule is a ``major rule.'' 
OIRA has determined that this interim final rule is not a major rule as 
defined by the CRA.\15\ The delayed effective date required by the CRA 
does not apply to any rule for which an agency for good cause finds 
(and incorporates the finding and a brief statement of reasons therefor 
in the rule issued) that notice and public procedure thereon are 
impracticable, unnecessary, or contrary to the public interest.\16\ For 
the same reasons noted above with respect to forgoing notice and 
comment in adopting this final rule, NCUA is adopting the final rule 
without the delayed effective date generally prescribed under the CRA.
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    \13\ 5 U.S.C. 801-808.
    \14\ 5 U.S.C. 804(3).
    \15\ 5 U.S.C. 804(2).
    \16\ 5 U.S.C. 808.
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List of Subjects in 12 CFR Part 723

    Credit, Loan programs--business, Reporting and recordkeeping 
requirements.

    By the National Credit Union Administration Board on this 2nd 
day of November, 2026.
Melane Conyers-Ausbrooks,
Secretary of the Board.

    For the reasons discussed in the preamble, the NCUA Board amends 12 
CFR part 723 as follows:

PART 723--MEMBER BUSINESS LOANS; COMMERCIAL LENDING

0
1. The authority citation for part 723 continues to read as follows:

    Authority:  12 U.S.C. 1756, 1757, 1757A, 1766, 1785, 1789.


Sec.  723.9  [Removed and Reserved]

0
2. Remove and reserve Sec.  723.9.

[FR Doc. 2026-22537 Filed 11-3-26; 8:45 am]
BILLING CODE 7535-01-P


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