The Final Member Business Loans (MBL) rule was published in the Federal Register this week.   NCUA approved the rule at its February open Board meeting.  The rule has an effective date of January 1, 2017, but the elimination of the personal guarantee requirement becomes effective May 13, 2016, which is 60 days after publication in the Federal Register.     

The final rule eliminates most of the current rule’s prescriptive limitations, such as collateral and security requirements, equity requirements and loan limits, and uses what NCUA calls a “broad principles-based regulatory approach” for safety and soundness.  NCUA states that this rule has eliminated most regulatory requirements from the MBL regulation, leaving mostly just Federal Credit Union Act (FCUA) requirements in place.   

The final rule also eliminates waiver processes, as most of the requirements needing waivers have been eliminated.   

We expect NCUA to quickly provide guidance to credit unions detailing examination requirements and other expectations for compliance with the new rule.