Key Takeaways
- • The OCC issued updated guidance (Bulletin 2025-45) on December 5, 2025, clarifying that national banks and federal savings associations should not be discouraged from engaging in prudent venture lending to early, expansion, and late-stage companies, rescinding prior 2023-34 guidance.
- • Venture loans carry materially higher default risk than traditional commercial loans due to heightened business uncertainty and failure probability, requiring banks to implement enhanced risk management, underwriting standards, documentation practices, and loan loss reserves.
- • Bank boards and management bear primary responsibility for ensuring venture lending portfolios align with established risk appetite, remain within defined risk limits, maintain appropriate underwriting documentation, receive accurate risk ratings, and are supported by sufficient loan loss reserves.
- • The OCC's updated policy signals supervisory openness to venture lending while establishing clear risk management expectations, with guidance applicable to all OCC-regulated institutions including community banks considering entry into this lending segment.
Summary
The Office of the Comptroller of the Currency released updated guidance on venture lending on December 5, 2025, reframing the regulatory approach to commercial loans extended to companies in early, expansion, or late stages of corporate development. The bulletin, designated OCC Bulletin 2025-45, rescinded prior guidance issued in 2023 and serves as a clarification of the OCC's supervisory stance toward this lending category.
The core message reflects a policy shift toward supervisory openness. Rather than discouraging banks from venture lending activities, the OCC explicitly states that prudent engagement in this market is permissible—provided rigorous risk management frameworks are implemented. The bulletin defines venture loans as commercial credit extended to high-risk borrowers across three development phases: pre-revenue and early-stage companies, expansion-stage entities, and late-stage ventures approaching maturity or exit events. These borrowers may exhibit negative, intermittent, or insufficient cash flow, creating elevated credit risk profiles compared to established commercial borrowers.
The OCC's updated guidance places governance responsibility squarely with each institution's board and senior management. Banks must ensure that venture loan portfolios remain consistent with their stated risk appetite, stay within pre-established risk limits, are supported by adequate underwriting documentation, receive accurate risk classifications, and maintain appropriate loan loss reserves. This framework acknowledges the inherently higher probability of default in venture lending relative to traditional commercial lending, necessitating differentiated risk measurement and capital provisioning approaches.
The bulletin's applicability extends across the full spectrum of OCC-regulated entities, including community banks that have added or are considering venture lending capabilities. This inclusivity reflects recognition that regional and smaller institutions increasingly compete in growth-stage financing markets alongside traditional venture capital and private equity sponsors. The guidance provides transparency into OCC supervisory expectations without imposing categorical prohibitions, positioning venture lending as a legitimate commercial activity subject to heightened due diligence and risk controls rather than an activity to be avoided.
The core message reflects a policy shift toward supervisory openness. Rather than discouraging banks from venture lending activities, the OCC explicitly states that prudent engagement in this market is permissible—provided rigorous risk management frameworks are implemented. The bulletin defines venture loans as commercial credit extended to high-risk borrowers across three development phases: pre-revenue and early-stage companies, expansion-stage entities, and late-stage ventures approaching maturity or exit events. These borrowers may exhibit negative, intermittent, or insufficient cash flow, creating elevated credit risk profiles compared to established commercial borrowers.
The OCC's updated guidance places governance responsibility squarely with each institution's board and senior management. Banks must ensure that venture loan portfolios remain consistent with their stated risk appetite, stay within pre-established risk limits, are supported by adequate underwriting documentation, receive accurate risk classifications, and maintain appropriate loan loss reserves. This framework acknowledges the inherently higher probability of default in venture lending relative to traditional commercial lending, necessitating differentiated risk measurement and capital provisioning approaches.
The bulletin's applicability extends across the full spectrum of OCC-regulated entities, including community banks that have added or are considering venture lending capabilities. This inclusivity reflects recognition that regional and smaller institutions increasingly compete in growth-stage financing markets alongside traditional venture capital and private equity sponsors. The guidance provides transparency into OCC supervisory expectations without imposing categorical prohibitions, positioning venture lending as a legitimate commercial activity subject to heightened due diligence and risk controls rather than an activity to be avoided.
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