True Lender
The doctrine determining which party in a bank–nonbank lending partnership is the actual lender, based on which holds the predominant economic interest; it decides whether state usury caps and licensing apply.
In a bank–nonbank lending partnership, sometimes called a “rent-a-bank” arrangement, a chartered bank originates a loan and a nonbank fintech partner markets it and acquires the economic interest. Because banks may export their home-state interest rate nationwide under federal law, the structure is used to extend that preemption to the nonbank. The “true lender” question asks which party is, in substance, the actual lender.
When the bank is the true lender, federal interest-rate preemption applies. When the nonbank holds the predominant economic interest, courts may treat it as the true lender, so that state usury caps and licensing requirements apply, exposing the program to penalties and potentially unenforceable loans. Courts apply a fact-intensive, totality-of-the-circumstances analysis, and no single set of factors is exclusive.
The OCC's 2020 federal true-lender rule, which keyed the determination to which entity was named in the loan agreement or funded the loan, was repealed by Congress under the Congressional Review Act in 2021, and the OCC is barred from issuing a substantially similar rule. The question has returned to state law and case law, and a growing number of states have codified anti-evasion standards based on predominant economic interest. For a fintech lending through a bank partner, true-lender exposure is a live design question, not a settled one.