On April 27, 2020, the Consumer Financial Protection Bureau (CFPB) released a blog post about Fair Lending to minority and women-owned businesses. The blog entry explains the purpose of the Coronavirus Aid, Relief, and Economic Security (CARES) Act and Small Business Administration’s Paycheck Protection Program (PPP). These loans are designed to allow small businesses to pay their employees and meet other short-term expenses, including mortgage interest, rent and utility costs. The CFPB states it is working with the Small Business Administration (SBA) to advance access to credit for minority, women-owned, and small businesses.
The post emphasizes that the Equal Credit Opportunity Act (ECOA) non-discrimination protections apply to new and existing customers (including depository customers) seeking access to the PPP loans and other loan relief programs related to COVID-19. Links to resources which describe borrower rights under the ECOA, how to protect oneself from discrimination, and warning signs of discrimination are provided. The post specifically lists the following examples of potential warning signs of lending discrimination based on race, sex, or other protected categories:
- Refusal of available loan or workout option even though you qualify for it based on advertised requirements;
- Offers of credit or workout options with a higher rate or worse terms than the one you applied for, even though you qualify for the lower rate;
- Discouragement from applying for credit by the lender because of a protected characteristic;
- Denial of credit, but are not given a reason why or told how to find out why; and,
- Negative comments about race, national origin, sex, or other protected statuses.
The CFPB is encouraging small business owners who believe they have been discriminated against based on race, sex, or other protected category to utilize the Bureau’s formal complaint online submittal tool. The CFPB states that through its consumer complaint system, companies respond to complaints about financial products and services and the complaint information impacts the CFPB’s supervisory and enforcement work.
This emphasis on the Fair Lending concerns and complaint system serves as another reminder of the potential Fair Lending implications of the PPP loan program – and all increased lending activitiy during this era of COVID-19.