OCC Updates Venture Lending Guidance and Clarifies Supervisory Expectations

On December 5, 2025, the Office of the Comptroller of the Currency (OCC) issued OCC Bulletin 2025-45 (the “2025 Bulletin”) with updated guidance for national banks and federal savings associations (generally, “banks”) regarding venture lending. The 2025 Bulletin rescinds and replaces the prior venture lending guidance issued on November 1, 2023, in OCC Bulletin 2023-34 (the “2023 Bulletin”) and reflects an evolution of the OCC’s supervisory approach to venture lending. The 2025 Bulletin applies to all OCC-supervised banks that currently engage in or are considering venture lending. Consistent with prior practice, the OCC’s expectations are framed within existing laws, regulations, and safe and sound banking principles, rather than introducing new regulatory requirements.

Background

The OCC defines venture lending as commercial credit targeting high-risk borrowers in an early, expansion, or late stage of corporate development that may not yet generate sustainable cash flows or possess sufficient conventional collateral, often relying on equity infusions to operate and grow. Consistent with the 2023 Bulletin, the 2025 Bulletin expressly excludes from the scope of venture lending certain forms of credit, including loans that rely on internally generated cash flow (rather than equity infusions), fully monitored and controlled asset-based lending, and loans supported by government guarantees.

Key Features of the 2025 Bulletin

1. Clarification of the Policy on Venture Lending

The OCC makes it clear that it does not discourage banks from engaging in prudent venture lending activities and recognizes that venture lending supports new business formation and improves access to capital for growth companies. The 2025 Bulletin reinforces, consistent with safe and sound banking principles, that it is the responsibility of each bank’s board and management to ensure that, among other requirements, venture lending activities are:

• Consistent with a risk appetite appropriate for the bank’s size and complexity;
• Executed by qualified staff with experience in venture lending;
• Appropriately underwritten and documented;
• Subject to ongoing monitoring and controls;
• Accurately risk rated; and
• Sufficiently reserved for expected losses.

This emphasis on supervisory transparency reflects the OCC’s intent to articulate its expectations without signaling any broad deterrent to banks engaging in venture lending.

2. Acknowledgment of Venture Lending Considerations

The 2025 Bulletin identifies the unique considerations and risks for growth companies and identifies the different characteristics of lending to Early- and Expansion-Stage Companies and Late-Stage Companies.

Early- and Expansion-Stage Companies

Emerging companies have limited revenues and high burn. Often loans to companies in this stage are considered “investor dependent” as the ongoing success of the company may rely on subsequent external equity financing. In these scenarios, lenders often rely on the quality of the investor or sponsors, certainty of subsequent raises, valuation, and burn in their underwriting. The 2025 Bulletin notes that reliance solely on these factors without additional credit enhancements may result in excessive risk taking. Controlled cash collateral is used as an example of a credit enhancement. This approach is consistent with the strong cash dominion requirements implemented by banks in the market.

Late-Stage Companies

Although late-stage companies are further along in their development cycle and have reached scale, these companies carry their own risks as cash flow may be negative, intermittent, or insufficient. In these scenarios, the 2025 Bulletin notes that secondary sources of repayment, which include private equity, public debt or equity, sale of assets and liquidity from prior fundraising, are often needed. The 2025 Bulletin is silent as to any views on excessive risk taking in these scenarios, however, the balance of the 2025 Bulletin sets forth an approach to proper risk management and underwriting consistent with standard safe and sound practice guidelines.

3. Risk Rating and Evaluating Repayment Sources

The 2025 Bulletin stresses the need for accurate risk ratings, which should be evaluated in a manner that is similar to other commercial credit with a focus on repayment capacity. The 2025 Bulletin sets forth the appropriate evaluation criteria that should be brought into focus during underwriting and which include, among other factors, an evaluation of:

• Performance to plan and reasonableness of projections;
• Ability to generate cash flows for repayment and cash liquidity;
• Committed equity financing (including evaluation of the likelihood of occurrence of any equity infusions tied to milestones); and
• Financial performance and long-term viability and sources of repayment; and
• Market changing conditions on the borrower’s ability to execute its plan, raise capital, maintain its equity valuation and/or exit.

The 2025 Bulletin recognizes that venture lending into certain market segments can require monitoring of certain sector-wide risks. This recognition corresponds well with the ongoing practice of banks engaged in the venture lending ecosystem of creating specialized teams that handle various market segments (e.g., technology, fintech, health care, etc.). Lenders should be careful to have their counsel implement sector-specific knowledge and curate provisions in the applicable credit agreement that will enhance that monitoring and control.

Implications for Market Participants

This updated venture lending guidance is part of a broader effort by the OCC and other banking agencies to shift their approach to lending related risks. It is significant that the 2025 Bulletin was issued on the same day that the OCC and Federal Deposit Insurance Corporation (FDIC) rescinded their versions of the Interagency Guidance on Leveraged Lending. The Board of Governors of the Federal Reserve System (FRB) has not yet rescinded its leveraged lending guidance. In this context, the 2025 Bulletin can be seen as encouraging banks to engage in venture lending, provided that the banks do so in a safe and sound manner consistent with a bank’s risk appetite and robust risk management.

While the 2025 Bulletin was issued by the OCC, banks supervised by the FDIC and FRB would be well served by reviewing the 2025 Bulletin in connection with their current or planned venture lending activities. Banks actively engaged in or considering venture lending should take note of the clarifications in the 2025 Bulletin and ensure their policies, underwriting practices, risk-rating frameworks, and documentation standards reflect the OCC’s articulated expectations. While the supervisory emphasis has shifted toward transparency and alignment with risk appetite, the inherent risks of venture lending—and the associated importance of prudent risk management—remain central to the OCC’s supervisory approach.