CFPB Publishes Reg B Small Business Lending FAQs

By John Zasada, JD, CAMS – Shareholder, Financial Institutions Group

On June 28, 2023, the Consumer Financial Protection Bureau (CFPB) issued 15 pages of Regulation B small business lending Frequently Asked Questions (FAQs). The FAQs were released the same day the CFPB held a webinar about the new rule (the webinar was only announced by the CFPB about a week before it was held). The FAQs are broken into two categories: institutional coverage, and covered credit transactions and small businesses.

The institutional coverage FAQs address a variety of topics, including the following:

• Whether it matters if a branch or office is located in a metropolitan statistical area
• If an institution is to count transactions by affiliates
• Whether refinancings count as covered originations
• If extensions or renewals count as covered originations
• Whether agricultural-purpose loans count as covered originations
• If construction loans count as covered originations
• How to determine originations if multiple institutions are involved
• How to treat multiple borrowers if only one is a small business

The covered credit transaction and small business FAQs address a variety of topics, including the following:

• If consumer-designated credit is excluded, even if the proceeds are used for a business purpose
• Can an individual or small proprietor be a small business
• Whether an individual’s personal income is included in determining whether a small proprietorship is a small business
• Can a start-up be a small business

For more information on how the new FAQs may impact your institution, contact Doeren Mayhew’s regulatory compliance specialists today.