republic-os/legal/us/code/title-12/chapter-16/section-1835.md

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LegalText	12 U.S.C. § 1835	Insured depository institution capital requirements for transfers of small business obligations	us	united_states_code	code_section	12	BANKS AND BANKING	16	FEDERAL DEPOSIT INSURANCE CORPORATION	1835	12 U.S.C. § 1835	current	119-100	2026-06-26	official	https://uscode.house.gov/download/releasepoints/us/pl/119/100/xml_usc12@119-100.zip	/us/usc/t12/s1835	data/legal/raw/us/code/title-12/usc12.xml	2023db8d2b1a2cebb2c18e634b6e43c3d282a039e693645ba1126b3f0acd43a8	e6b98700ef4156ac33fde5d105824845d727afa91a53f3762be2cf4d1a3b01fa	9e1fdf1be90d623f018af8825314fcb6a1edd24800429ccf92e0314b6ffc542d	2026-07-04	official	legal us-code

12 U.S.C. § 1835 - Insured depository institution capital requirements for transfers of small business obligations

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(a) Accounting principles The accounting principles applicable to the transfer of a small business loan or a lease of personal property with recourse contained in reports or statements required to be filed with Federal banking agencies by a qualified insured depository institution shall be consistent with generally accepted accounting principles.

(b) Capital and reserve requirements With respect to the transfer of a small business loan or lease of personal property with recourse that is a sale under generally accepted accounting principles, each qualified insured depository institution shall—

(1) establish and maintain a reserve equal to an amount sufficient to meet the reasonable estimated liability of the institution under the recourse arrangement; and

(2) include, for purposes of applicable capital standards and other capital measures, only the amount of the retained recourse in the risk-weighted assets of the institution.

(c) Qualified institutions criteria An insured depository institution is a qualified insured depository institution for purposes of this section if, without regard to the accounting principles or capital requirements referred to in subsections (a) and (b), the institution is—

(1) well capitalized; or

(2) with the approval, by regulation or order, of the appropriate Federal banking agency, adequately capitalized.

(d) Aggregate amount of recourse The total outstanding amount of recourse retained by a qualified insured depository institution with respect to transfers of small business loans and leases of personal property under subsections (a) and (b) shall not exceed—

(1) 15 percent of the risk-based capital of the institution; or

(2) such greater amount, as established by the appropriate Federal banking agency by regulation or order.

(e) Institutions that cease to be qualified or exceed aggregate limits If an insured depository institution ceases to be a qualified insured depository institution or exceeds the limits under subsection (d), this section shall remain applicable to any transfers of small business loans or leases of personal property that occurred during the time that the institution was qualified and did not exceed such limit.

(f) Prompt corrective action not affected The capital of an insured depository institution shall be computed without regard to this section in determining whether the institution is adequately capitalized, undercapitalized, significantly undercapitalized, or critically undercapitalized under section 1831o of this title.

(g) Regulations required Not later than 180 days after September 23, 1994, each appropriate Federal banking agency shall promulgate final regulations implementing this section.

(h) Alternative system permitted (1) In general At the discretion of the appropriate Federal banking agency, this section shall not apply if the regulations of the agency provide that the aggregate amount of capital and reserves required with respect to the transfer of small business loans and leases of personal property with recourse does not exceed the aggregate amount of capital and reserves that would be required under subsection (b).

(2) Existing transactions not affected Notwithstanding paragraph (1), this section shall remain in effect with respect to transfers of small business loans and leases of personal property with recourse by qualified insured depository institutions occurring before the effective date of regulations referred to in paragraph (1).

(i) Definitions For purposes of this section—

(1) the term “adequately capitalized” has the same meaning as in section 1831o(b) of this title;

(2) the term “appropriate Federal banking agency” has the same meaning as in section 1813 of this title;

(3) the term “capital standards” has the same meaning as in section 1831o(c) of this title;

(4) the term “Federal banking agencies” has the same meaning as in section 1813 of this title;

(5) the term “insured depository institution” has the same meaning as in section 1813 of this title;

(6) the term “other capital measures” has the meaning as in section 1831o(c) of this title;

(7) the term “recourse” has the meaning given to such term under generally accepted accounting principles;

(8) the term “small business” means a business that meets the criteria for a small business concern established by the Small Business Administration under section 632(a) of title 15; and

(9) the term “well capitalized” has the same meaning as in section 1831o(b) of this title.

(Pub. L. 103–325, title II, § 208, Sept. 23, 1994, 108 Stat. 2201.)

Notes

Editorial Notes

Codification Section was enacted as part of the Small Business Loan Securitization and Secondary Market Enhancement Act of 1994 and as part of the Riegle Community Development and Regulatory Improvement Act of 1994, and not as part of the Federal Deposit Insurance Act which comprises this chapter.