The short answer
For a national bank or federal savings association, loans to one borrower may not exceed 15 percent of capital and surplus, plus 10 percent more if the excess is fully secured by readily marketable collateral. Loans to related borrowers are added together. A nonrecourse, pro rata participation sold to another lender comes out of the seller's total. State-chartered banks follow state law, and a bank's own house limit may be lower.
The rule in one paragraph
A national bank’s or federal savings association’s loans and extensions of credit to one borrower may not exceed 15 percent of its capital and surplus. An added 10 percent is allowed if the amount above the 15 percent is fully secured by readily marketable collateral. That is the combined general limit in 12 CFR 32.3(a), which carries out 12 U.S.C. 84. It is the number a banker means by the legal lending limit.
The rule sets a ceiling on exposure to one borrower. It says nothing about whether a bank wants the loan, and a bank may keep a lower house limit of its own.
What counts as capital and surplus
For most national banks and federal savings associations, capital and surplus is tier 1 plus tier 2 capital as reported in the call report, plus the part of the allowance for loan and lease losses (or adjusted allowance for credit losses) that is not already counted in tier 2. A qualifying community bank that has elected the simplified capital framework in 12 CFR part 3 (called CBLR) counts tier 1 capital plus its allowance instead.
The bank sets its limit as of the last day of the preceding calendar quarter, or the date its capital category changes, whichever is more recent (12 CFR 32.4). So the limit moves each quarter with capital.
What counts as a loan
The definition is wider than funded balances. It covers any direct or indirect advance of funds to or for a borrower, and it includes a contractual commitment to advance funds, so an unused commitment counts in full. A standby letter of credit, a guarantee or surety, overdrafts, Federal funds sold for more than one business day, and loans charged off but still enforceable also count.
Left out are advances to protect collateral (taxes, insurance, maintenance), accrued interest, and the part of a loan sold as a participation on a nonrecourse basis with a pro rata sharing of credit risk.
The extra 10 percent
Readily marketable collateral means financial instruments and bullion that can be sold under ordinary conditions with reasonable promptness at a fair market value set by quotations from an auction or daily bid and ask market. Real estate is not in that group. The bank must perfect its security interest, and the collateral’s current market value must stay at or above 100 percent of the amount above the general limit.
Related borrowers are added together
Under 12 CFR 32.5, a loan to one person is attributed to another when its proceeds are used for the other’s direct benefit, or when a common enterprise exists. A common enterprise is deemed to exist when:
- the expected source of repayment is the same for each borrower, and neither has another source;
- the borrowers are related through common control and substantially interdependent, meaning 50 percent or more of one’s gross receipts or expenses are with the other;
- separate persons borrow to buy a business of which they will own more than 50 percent of the voting interests; or
- the regulator finds one on the facts.
A corporate group, meaning a person and its majority-owned subsidiaries, is capped at 50 percent of capital and surplus. Loans to a partnership are treated as loans to each member who is generally liable for its debts.
What a participation does to the arithmetic
The seller of a participation keeps in its own total only what it retains, if the sale is nonrecourse and shares credit risk pro rata. If the seller funds the whole loan first, it must receive the participants’ money before the close of its next business day. Otherwise the funded portions count as its own loan, and an excess may be treated as nonconforming rather than a violation only if the participation agreement was valid and unconditional and the participant reconfirmed.
The buyer’s share is its own advance of funds to the borrower, so it counts against the buyer’s limit. See how participations work.
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Special limits and exempt loans
Some loans have their own limits, which stack with the general limit, such as loans secured by documents covering readily marketable staples (35 percent more). Some are outside the limit, among them loans to a federal agency, loans secured by a segregated deposit account at the lending bank, and the part of a loan covered by an unconditional federal agency guarantee payable within 60 days of demand.
An eligible national bank can also use the Supplemental Lending Limits Program in 12 CFR 32.7. It adds up to 10 percent of capital and surplus for residential real estate, small business and small farm loans, tied to what a state bank in the same state may lend. Total exposure to one borrower stays under 25 percent of capital and surplus, and the bank must first receive its supervisory office’s consent. A savings association whose calculated limit is under $500,000 may lend up to $500,000 to one borrower.
State banks and credit unions
Part 32 covers national banks and savings associations (12 CFR 32.1(c)). It does not cover state-chartered banks. Their limit comes from the law of the state that chartered them, which federal law recognizes: 12 U.S.C. 1828(y) refers to the lending limit law of the chartering state. This guide gives no state percentages because they differ by state.
A credit union’s rule is in 12 CFR 723.4. Its policy must cap commercial loans to one borrower or group of associated borrowers at the greater of 15 percent of net worth or $100,000, plus 10 percent of net worth if the excess is fully secured by readily marketable collateral. The part of a loan that a federal or state agency program backs with a repayment guaranty, or with an advance commitment to buy the loan in full, is excluded.
Limits on loans to one borrower, by kind of lender
| Lender | Rule | General limit | Added room |
|---|---|---|---|
| National bank | 12 CFR 32.3(a) | 15% of capital and surplus | 10% more if the excess is fully secured by readily marketable collateral |
| Savings association | 12 CFR 32.3(a) and (d) | The same, with a $500,000 floor | The same |
| State-chartered bank | The chartering state’s law | Not stated here | Not stated here |
| Credit union | 12 CFR 723.4(c) | Greater of 15% of net worth or $100,000 | 10% of net worth, same collateral test |
Questions to put to the bank
- What is the largest loan you will hold to one borrower for this kind of request, and is that your legal limit or your house limit?
- If my request is above it, will you sell a participation, and do you need the buyer before you close?
- Will you add my related companies’ loans and commitments to this one?
- Does an undrawn construction commitment or a standby letter of credit count in the same total?
A worked example
Worked example (hypothetical). A national bank reports tier 1 capital of $50,000,000, tier 2 capital of $5,000,000 and $2,000,000 of allowance not counted in tier 2. Capital and surplus is $57,000,000. The general limit is 15 percent, $8,550,000. With marketable securities worth at least the excess, 10 percent more, $5,700,000, would raise it to $14,250,000.
A borrower asks for $12,000,000 and has no marketable collateral. The bank can hold $8,550,000 and must place $3,450,000 elsewhere. If it sells that as a nonrecourse, pro rata participation, funded by the close of its next business day, its own loan is $8,550,000 and within the limit. Now say the owner also controls a second company that earns 60 percent of its receipts from the first and has a $2,000,000 loan. The loans are combined, $14,000,000 in all, and the bank’s retained share across both still has to fit under $8,550,000.
A credit union with $20,000,000 of net worth has a 15 percent limit of $3,000,000, and $5,000,000 with the added 10 percent if the excess is fully secured by readily marketable collateral.
What the public record can and cannot tell you
Of the 4,313 FDIC institution record, banks in the file, those with capital figures on record get an Estimated largest single loan on their lender page. It is 15 percent of tier 1 capital plus the allowance, from the call report, labeled an estimate from reported capital, not a limit the lender has stated. It is simpler than the rule: it leaves out tier 2 capital other than the allowance and the extra 10 percent, and it does not use state law. For a credit union, the page shows the greater of 15 percent of net worth or $100,000.
No public file shows a bank’s exposure to any borrower, its house limit, or whether a loan was shared. Ask the lender for the largest loan it will hold on its own for your kind of request, and whether it brings in participants above that.
Terms used here
- Legal lending limit: The most a bank may have outstanding to one borrower by law. For national banks it is 15 percent of capital and surplus, plus 10 percent more when the extra is fully secured by readily marketable collateral.
- Capital and surplus: The capital base a national bank's lending limit is measured against: tier 1 and tier 2 capital plus the part of the loan loss allowance that tier 2 leaves out.
- House limit: A cap a bank sets for itself, below the legal lending limit, on how much it will hold for one borrower, one property type or one market.
- Loans to one borrower: The total a bank counts against its lending limit for one borrower: loans, binding commitments and standby letters of credit, plus loans to related parties that the rules combine.
- Tier 1 capital: A bank's core capital under the capital rule: common equity tier 1 plus additional tier 1. The minimums are 6 percent of risk-weighted assets and a 4 percent leverage ratio.
- Allowance for credit losses: The reserve a lender builds through charges against earnings for the loan losses it expects, which brings the loans on its books down to the amount it expects to collect.
- Unused commitment: The part of a legally binding promise to lend that the borrower has not drawn yet, such as the open amount on a line of credit or the unfunded balance of a construction loan.
- Standby letter of credit: A bank's written promise to pay a third party if the bank's customer does not repay a debt or does not perform an obligation.
Sources
Every rule and outside figure above comes from one of these, opened on . Dates are the source's own. Figures from this site's data carry their own source and date beside them.
- 12 CFR 32.1 and 32.2, scope and definitions (OCC lending limits), retrieved .
- 12 CFR 32.3 and 32.4, lending limits and how they are calculated, retrieved .
- 12 CFR 32.5, combination rules, retrieved .
- 12 CFR 32.7, Supplemental Lending Limits Program, retrieved .
- 12 CFR 723.4, commercial loan policy (NCUA), retrieved .
- 12 U.S.C. 1828(y), state lending limit treatment of derivatives transactions, retrieved .
Next step: check the record
- Estimate a bank's limit from its capitalType tier 1, tier 2 and allowance figures. It shows the 15 percent limit and the added 10 percent.
- Banks by estimated largest single loanBanks whose estimate is $5 million or more, sorted by owner-occupied commercial real estate held. Each lender page prints its own estimate, formula and date.
- Credit unions that make business loansThe national list. A credit union's page shows an estimated largest single borrower from net worth.
Keep reading
- Legal lending limit estimate: The most a bank can lend to one borrower, from public capital figures. Always an estimate.
- How to pick banks for a deal with public data: Public filings cannot tell you which bank will say yes. They can tell you which banks are large enough, already hold loans like yours and lend where the property is. That is enough to turn four thousand banks into six phone calls.
- The CRE concentration guidance, explained: Bank regulators watch how much commercial real estate a bank holds against its capital. The guidance sets two screens. It does not set a limit, and it does not count owner-occupied buildings.
- Loan participations, explained: A participation lets one lender make a loan that is too large for it to hold alone. The borrower signs with one lender. Behind that lender, others own pieces of the loan and share its risk.
- Supervisory loan to value limits and HVCRE, explained: Two federal rules shape how much a bank will lend against real estate: a table of loan to value ceilings, and a capital rule that makes some construction loans cost the bank more to hold.
- How to place a business loan with a credit union: Credit unions make business loans, and some make a lot of them. Three things are different from a bank: the borrower must be a member, most credit unions work under a cap on business loans, and the limit to one borrower is set against net worth.
Questions people ask
Is the estimate on a lender page the bank's actual limit?
No. It is our calculation from the call report: 15 percent of tier 1 capital plus the allowance. The bank applies the rule to its own books, a state-chartered bank follows its state's limit, and the bank may set a lower house limit. The page labels it an estimate, not a limit the lender has stated.
Does an SBA guaranty count against a bank's lending limit?
Under 12 CFR 32.3(c)(4), the part of a loan secured by an unconditional guarantee of a federal agency, payable within 60 days after demand, is outside the limit. Whether a particular guaranty meets that test is for the bank and its regulator.
Cite this
Source: The Lender Report, The legal lending limit, explained, https://lender.report/guides/legal-lending-limit-explained/, data as of November 9, 2026.
General information, not legal, tax or credit advice. A lender's own policy decides what it will do; ask it for the policy in writing.
Source and date appear beside each figure. Banks report balances, not loans made. Loans made come only from HMDA and SBA files. We do not audit filings and can make errors joining them. Report a problem