An application for a loan under the Paycheck Protection Program (PPP) is only a “completed application” once the creditor has received a loan number from the Small Business Administration (SBA) or a response about the availability of funds, the federal consumer financial protection agency said in a notice published Wednesday.
The notice was published by the Consumer Financial Protection Bureau (CFPB) as “clarifying frequently asked questions (FAQs)” about the PPP program. The bureau noted that, generally under the Equal Credit Opportunity Act and Regulation B, creditors are required to 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 notices, the bureau said, are designed to help consumers and businesses by providing transparency to the credit underwriting process in a timely manner. “Information that is generally included in a complete application includes any approvals or reports by governmental agencies or others who can guarantee, insure, or provide security for the credit or collateral.”
Since an application is considered to be completed once the loan number or availability of funds notice has been released, the bureau said, the time waiting for information from the SBA does not count toward the 30-day notice requirement, and applications thus will not “time out” during the process.
The CFPB said the FAQs also clarify that if the creditor denies an application without ever sending the application to the SBA, the creditor must give notice of this adverse action within 30 days. The document also clarifies, the agency said, that a creditor cannot deny a loan application based on incompleteness where the creditor has enough information for a credit decision but has yet to receive a loan number or response about the availability of funds from the SBA.
Consumer Financial Protection Bureau Issues Clarifications to Support Small Business Applying for PPP Loans