CFPB is currently scheduling Small Business Fair Lending Reviews at financial institutions of all sizes, with a strong focus on pandemic lending practices. We explore what to expect and how to prepare.
Small businesses are the lifeblood of local economies and communities across the US—and fair and equitable access to credit is critical to sustain these businesses. Even prior to the pandemic, the Consumer Financial Protection Bureau (CFPB) began to focus on small business lending and servicing activities at some of the country’s largest banks. Then came COVID-19. Small businesses across the country were severely impacted by the pandemic – many were temporarily shut down while others permanently closed.
The Paycheck Protection Program (PPP) and the CARES Act provided financial relief through funding and forbearance programs; however, regulators are now working to ensure that small businesses were treated fairly by creditors during the pandemic and that these relief programs were provided in a non-discriminatory manner. In other words, Small Business Fair Lending has become a priority for CFPB.
CFPB is currently scheduling numerous Small Business Fair Lending Reviews at large banks—building on the pre-pandemic work that had already begun—as well as with many other financial institutions, including community and midsize banks. PPP is clearly under the microscope in these reviews, especially regarding disparities in how customers were treated and any barriers to protected classes. Yet despite this focus, formally defined guidance and processes are not yet available to the examiners or the industry. As a result, these reviews are currently a work in progress—they are learning as they go.
Here are four steps to take now:
Risk Management Solutions Group (RMSG) offers a comprehensive suite of regulatory and compliance services for community and midsize banks. Customized to your unique business needs, our consulting services are delivered by experienced subject matter professionals—all at an accessible price.
When it comes to CFPB Small Business Fair Lending Reviews, we can help you with understanding what to expect and how to prepare. From help with conducting a lending risk assessment to reviewing your current procedures to ensure you are in compliance, we can assist you through the review process from start, to finish—and beyond.