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On May 6, 2020, the Consumer Financial Protection Bureau (CFPB) issued an FAQs document on providing Regulation B adverse action notices in light of the COVID-19 emergency. The document addresses Paycheck Protection Program (PPP) loans and how to handle Regulation B adverse action notices in response to applications for PPP loans. It clarifies a PPP application submitted by a creditor to the Small Business Administration (SBA) for loan processing is not a “completed application” under Regulation B until a creditor receives a loan number from the SBA or a response about the availability of funds. Therefore, where the creditor has submitted to the SBA a PPP application, the 30-day timeline to notify the applicant of the action taken on a completed application under Regulation B does not begin until the creditor has received a loan number from the SBA or a response about the availability of funds.
If a creditor receives a PPP loan application and denies the request without ever submitting the PPP loan to the SBA, the creditor is required to provide a Regulation B adverse action notification along with the specific reasons for the credit denial (or notice of the right to receive the reasons).
If a creditor has gathered enough data from a PPP loan applicant to make a credit decision but has not received a loan number from the SBA or a response about the availability of funds, the creditor cannot deny the application based on incompleteness. Pursuant to Regulation B, an application may be denied for incompleteness only if an application is incomplete regarding information that the applicant can provide, and the creditor lacks sufficient data for a credit decision.
For more information on how Regulation B may impact your institution, contact Doeren Mayhew’s compliance specialists.
This publication is distributed for informational purposes only, with the understanding that Doeren Mayhew is not rendering legal, accounting, or other professional opinions on specific facts for matters, and, accordingly, assumes no liability whatsoever in connection with its use. Should the reader have any questions regarding any of the news articles, it is recommended that a Doeren Mayhew representative be contacted.
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