CFPB Issues FAQs Regarding ECOA and Regulation B Compliance Related to COVID-19 Crisis

The CFPB recently issued three FAQs clarifying how ECOA and Regulation B apply to applications for loans under the Small Business Administration’s (SBA) Paycheck Protection Program (PPP). Under the program, applicants apply to creditors who in turn are in contact with the SBA.

The first FAQ addressed the requirement under the ECOA and Regulation B that creditors notify applicants within 30 days of receiving a “completed application” of the creditor’s approval, counteroffer, denial or other adverse notice regarding the application.  The FAQ clarified that a PPP application is only a “completed application” once the creditor has received a loan number or a response about the availability of funds from SBA.  Consequently, the 30-day timeline to notify the applicant of the action taken on a completed application does not begin until a creditor either receives the loan number or the response.

The second FAQ points out that under Regulation B, if a creditor receives an SBA PPP loan application but refuses to grant the credit request without submitting the loan to the SBA, the creditor must provide an adverse action notification within 30 days after it takes action on the application.

The third FAQ provides that under Regulation B, an application may be denied for incompleteness only if the information the applicant provides is incomplete and the creditor lacks enough data for a credit decision. If the creditor has not received a loan number or a response from SBA, a creditor cannot deny an application based on incompleteness because this is not information that the applicant could provide.