CFPB Compliance Aid Clarifies ECOA Notification Obligations for PPP Loans

The Consumer Financial Protection Bureau today published a compliance aid to provide additional clarity regarding banks’ obligations under the Equal Credit Opportunity Act with regard to borrowers who have applied for a Small Business Administration Paycheck Protection Program loan.

Under ECOA, banks must notify credit applicants with an approval, counteroffer, denial or other adverse notice within 30 days of receiving a completed application. The CFPB clarified that PPP loan applications are only considered completed applications once the creditor receives a loan number from the SBA or a response about the availability of funds.

The CFPB also noted that if a creditor receives an PPP loan application and refuses to grant the credit request without ever submitting the PPP loan to the SBA, they must provide an adverse action within 30 days after taking the adverse action. Finally, CFPB confirmed that creditors may not deny an application if it has gathered sufficient data from the applicant for a credit decision but has not received a loan number from the SBA or a response on the availability of funds.

  • Also in PPP news, SBA announced that it had approved 2.44 million round two PPP loans amounting to $183.5 billion as of 5 p.m. EDT today, up $2.3 billion from the approved total on Tuesday.
  • SBA also released a new interim final rule today addressing PPP applications from businesses exempt from non-discrimination requirements for certain practices under federal law, such as single-sex school admissions and tribal preferences in adoption placement, as well as circumstances when student workers count as employees for determining PPP eligibility.
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