SDBA eNews

July 9, 2020

SBA Releases Data on PPP Borrowers and Loans

The Small Business Administration (SBA) on Monday released public data on Paycheck Protection Program (PPP) participants, including borrowers and lenders, as of June 30.

For loans $150,000 and above, SBA disclosed the name and location of the business receiving the loan, the number of employees benefiting, the name of the lender, the congressional district of the borrower and a range where the loan amount falls. For loans below $150,000, SBA did not release borrower names but did include precise loan amounts. The public data set did not include information on PPP loans that were canceled.

A total of approximately $131 billion of PPP funding was still available as of Tuesday, and with a new law that was signed by President Trump this past weekend, the program will remain operational until Aug. 8. View the data.

The ABA has updated its talking points on PPP to reflect the latest data released by the SBA, including borrower and lender information for PPP loans. View the talking points.

Fed Publishes Partial State-by-State List of MSLP Lenders

The Federal Reserve yesterday unveiled an interactive state-by-state map listing lenders participating in the Main Street Lending Program that have chosen to be listed and are currently accepting applications from new customers. MSLP registered lenders that wish to be added to the Federal Reserve Bank of Boston’s list can email [email protected]. The Boston Fed will update the listing regularly as new lenders complete the registration process and elect to be included on the map.

Under the MSLP, businesses may apply for funding through a registered lender, which will then determine eligibility using its own underwriting criteria. The Fed will purchase up to 95% of MSLP loans made through its MSLP facility. Lenders will retain the other 5%. Read more and view the list. For more information, contact ABA’s Shaun Kern or Hu Benton.

CFPB Removes Underwriting Provisions from 2017 Small-Dollar Lending Rule

The Consumer Financial Protection Bureau on Tuesday issued a long-awaited final rule removing the prescriptive underwriting provisions from its 2017 small-dollar lending rule. That rule imposed an ability-to-pay test on a wide-swath of small-dollar loans of 45 days or less, including payday loans, auto title loans and bank-provided loans with balloon payments.

Yesterday’s final rule—which takes effect 90 days after publication in the Federal Register—preserves the complete exemption for banks and other depository institutions that made 2,500 or fewer small-dollar loans in each of the current and previous years and for which these loans account for no more than 10% of revenues. 

The CFPB also said it would move ahead with the rule’s payment provisions, which prohibit lenders from making a new attempt to withdraw funds from an account after two consecutive failed attempts without consumer consent. Those provisions exempt attempted transfers by institutions that hold the borrower’s account and do not charge an insufficient funds or overdraft fee for the attempted withdrawal.

In addition, the CFPB issued a statement on Tuesday noting that it “does not intend to take supervisory or enforcement action” to enforce the payment provisions with regard to cover loans that exceed the Regulation Z coverage threshold, which is currently set at $58,300. ABA had urged the bureau to exempt from the rule’s coverage traditional consumer loans made by banks, such as “bridge” loans, demand lines of credit and loans secured by securities.

ABA Welcomes E-Sign Modernization Bill

The ABA last week welcomed a bill authored by Sens. John Thune (R-S.D.), Jerry Moran (R-Kan.) and Todd Young (R-Ind.) that would streamline how consumers consent to receiving electronic documents, such as bank statements, account information and contracts. The E-Sign Modernization Act would update the 20-year-old E-Sign Act to reflect advancements in technology and shifting consumer preferences. Specifically, the bill would remove the current requirement for consumers to reasonably demonstrate that they can access documents electronically before they can receive an electronic version.

“This legislation will help ensure customers’ requests to access digital banking services are quickly honored, particularly when brick-and-mortar operations are disrupted or customers are temporarily displaced,” said ABA President and CEO Rob Nichols. “This update to one of the landmark laws of the internet age will also mean more widely available and innovative choices for bank customers, including the ability to more easily manage how much paper they receive.” Read more.

FinCEN Warns of Impostor, Money Mule Scams Connected with COVID-19

The Financial Crimes Enforcement Network on Tuesday issued an advisory alerting financial institutions to impostor scams and money mule schemes connected to the coronavirus pandemic. The advisory highlights several red flag indicators associated with these scams and reminded banks to report any suspicious activity.

FinCEN noted that COVID-19 impostor scams generally involve fraudsters posing as officials or representatives from the IRS, the Centers for Disease Control and Prevention, the World Health Organization or other health care or nonprofit groups and academic institutions. Such scams often seek to coerce victims to provide personal information or send payment in order to receive coronavirus-related government benefits or to share information as part of contact tracing efforts.

In addition, money mule scams have been observed during the pandemic, with scammers often using good-Samaritan, romance or work-from-home schemes to entice victims to open new bank accounts that can then be used to move laundered funds. Read the advisory. For more information, contact ABA’s Rob Rowe .

Podcast: Healing 'Pain Points' for Multi-generational Family Businesses

Wendy Cai-Lee leads one of the latest crop of U.S. de novo banks: Piermont Bank, opened to address “pain points” faced by middle-market businesses. Often privately owned and multigenerational family-operated, these businesses have complex financial needs based on the intertwining of ancillary businesses and commercial real estate ownership, combined with unique personal banking and wealth management concerns for the business owners.

On the latest episode of the ABA Banking Journal Podcast, Cai-Lee discusses:

  • How Piermont’s “tech-enabled but not tech-driven” approach sets it apart from nonbank fintech lenders and other banks.
  • The outlook for commercial real estate in Piermont Bank’s market, including decreased appraisal values across the board for retail-heavy properties.
  • Piermont’s business and regulatory experience as part of a small wave of de novos after nearly a decade of virtually no de novo activity.
  • The importance of diversity to Piermont Bank, a woman-founded bank whose board is half women.

Listen to the episode.

USDA Seeks Applications to Support Working Capital for Rural Businesses, Ag Producers

The Coronavirus Aid, Relief and Economic Security (CARES) Act passed by Congress authorized nearly $1 billion in additional loan guarantee authority for the U.S. Department of Agriculture and created the Business and Industry (B&I) CARES Act Program. 

For the first time, agricultural producers may access this program if they are ineligible for financing from USDA’s Farm Service Agency. Any loan guaranteed by the B&I CARES Act Program must be used as working capital to prevent, prepare for or respond to the effects of the coronavirus pandemic.

SBS Institute to Hold CyberRiskNOW Virtual Conference on Security Testing

SBS Institute will hold the CyberRiskNOW Virtual Conference: Security Testing Edition on Wednesday, July 15. This virtual conference is designed to provide interactive training on evolving cybersecurity threats and how your organization should be testing its people, process and technology in today's cyber-landscape. It will cover the numerous different ways to consider testing your information security program, from a process perspective (policy, procedure, governance), a technology perspective (are the controls you've implemented working as intended and are they adequate), and a people perspective (is all that security awareness training effective).

Not only will this virtual conference include live video from the presenters, but you will be able to interact with other attendees and with event moderators through a virtual lobby in Discord, as well as share information, best-practices and tools you’re using at your organization. The cost for the full day of learning is $249. Learn more and register

 Compliance Alliance

Question of the Week

Question:  Can the bank convert a HELOC that is getting close to its maturity date into a closed-end, amortizing loan without requiring TRID disclosures?

Answer: Unfortunately, no--if during the loan term a HELOC is converted from open-end credit to closed-end credit, that would trigger closed-end credit requirements, including the TRID disclosures, as set out here:

“Converting open-end to closed-end credit. Except for home equity plans subject to § 1026.40 in which the agreement provides for a repayment phase, if an open-end credit account is converted to a closed-end transaction under a written agreement with the consumer, the creditor must provide a set of closed-end credit disclosures before consummation of the closed-end transaction… If consummation of the closed-end transaction occurs at the same time as the consumer enters into the open-end agreement, the closed-end credit disclosures may be given at the time of conversion. …”

Comment for 1026.17(b)-2 Converting Open-End To Closed-End Credit:

Also, if the bank is internally calling this action a "modification," it still would not change these requirements. Of course, this is assuming that the conversion is not part of an established repayment phase that was part of the original agreement, as described above.

Comment for 1026.17 - General Disclosure Requirements | Consumer Financial Protection Bureau

The comment for 1026.17 is part of 12 CFR Part 1026 (Regulation Z). Regulation Z protects people when they use consumer credit.

Also, if the bank is internally calling this action a "modification," it still would not change these requirements. Of course, this is assuming that the conversion is not part of an established repayment phase that was part of the original agreement, as described above.

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Contact Alisa Bousa, SDBA, at 800.726.7322 or via email.