Industrial Loan CompanyILC
An industrial loan company (ILC), also called an industrial bank, is a state-chartered, FDIC-insured bank that a commercial company can own without becoming a bank holding company supervised by the Federal Reserve. Most are chartered in Utah, with a smaller number in Nevada.
How the ILC exemption works
The Competitive Equality Banking Act of 1987 excluded qualifying industrial loan companies from the Bank Holding Company Act’s definition of “bank.” The ILC itself is a real bank: it makes loans, takes FDIC-insured deposits, and is examined by its state regulator and the FDIC. Its parent, though, can be an automaker, a retailer or a fintech, and it does not face the consolidated Federal Reserve supervision that applies to a bank holding company.
The exemption comes with limits. An ILC with more than $100 million in assets generally cannot offer demand deposits such as checking accounts unless it qualifies under a grandfather provision. Since 2021, FDIC rules (12 CFR Part 354) also require a parent company to sign written commitments with the FDIC covering capital and liquidity support for the bank, reporting, and examination of the parent’s relationship with the ILC.
Who is applying now
ILCs have become the charter of choice for consumer fintechs and commercial companies that want insured deposits without holding company supervision. As of October 20, 2026, the FDIC’s list of pending deposit insurance applications included five proposed Utah ILCs and two in Nevada. De Novo Watch tracks the full list:
- Utah: PayPal Bank, OneMain Bank, Klarna Bank USA, Albert Bank and Flex Bank
- Nevada: Affirm Bank and Upgrade Bank
Recent approvals
On January 22, 2026, the FDIC approved deposit insurance for Ford Credit Bank and GM Financial Bank, two Utah ILCs owned by automakers. Each must maintain a 15% tier 1 leverage ratio, well above the 8% the FDIC typically expects of a community de novo, along with capital and liquidity support from its parent. None of the fintech ILC applicants had received a decision as of October 2026, and OneMain’s application had been pending since March 2025.
The debate
Critics call the exemption the ILC loophole, arguing it mixes banking and commerce and leaves the parent outside bank-level supervision. In August 2026, the Bank Policy Institute and the Independent Community Bankers of America urged the FDIC not to insure Albert, or any ILC applicant, until Congress closes it. A bill introduced in January 2026 to close the gap is pending in the Senate Banking Committee. The FDIC opened a review of its ILC policy in July 2025.
For community banks the practical concern is deposits. An ILC owned by a payments app or retailer can put an insured savings account one screen away from millions of existing customers, with no branch network to fund.
Common questions
Is an industrial loan company FDIC insured?
Yes. An ILC cannot operate without FDIC deposit insurance, and the FDIC examines it alongside the state regulator. What differs is the parent: it is not supervised as a bank holding company.
Which states charter industrial loan companies?
Utah charters most of them, and Nevada charters a smaller number. Of the seven fintech and consumer lender ILC applications pending with the FDIC in October 2026, five were in Utah and two in Nevada.
Why do fintechs want ILC charters?
An ILC lets a fintech fund loans with its own insured deposits instead of renting a partner bank, and keep the economics it now shares with that partner, without the parent becoming a bank holding company.
How long does ILC approval take?
It varies widely and can take years. OneMain’s Utah ILC application was received by the FDIC in March 2025 and was still pending in October 2026. Track every pending application on RAVEN’s De Novo Watch.