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#1348170 - 02/24/10 03:06 PM community involvement
swthomeala Offline
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Georgia
Our bank is participating with a business customer who received a federal grant to lend money to individuals with less than perfect credtit to go thru and extensive program to allow them to open a small business in the community. [we are doing this for CRA credit]

We currently have a special program for individuals who have less than perfect credit to enroll in a 2 hour seminar and open a closely monitored checking account for 6 months and then convert to a regular checking account if they have maintained there account in good standing for the 6 month monitoring period.

I can't find specifics on whether we can alter our individual program and open it up just to these selected small business customers [who would have the same monitoring as the individuals and therefore be able to have a checking account whereby they might not qualify any other way] and not be in violation of not offering any small business customer the same product.

Can I get some feedback on this?
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CRA
#1348228 - 02/24/10 03:40 PM Re: community involvement swthomeala
Mrs. Rizzo Offline
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Curled up by the fire...
Well, if it's a program geared towards those with bad history...wouldn't they be the only ones participating? You wouldn't have to worry about everyone right?
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#1349061 - 02/25/10 03:57 PM Re: community involvement Mrs. Rizzo
swthomeala Offline
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Joined: Oct 2005
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Georgia
The program is only open to individuals. We would be making a special allownace for these select small business customers to participate. My problem would be that if another small business customer [be it ours or someone elses] heard that we were doing this and wanted to participate - can we turn them down because we don't want this to be an ongoing thing? Where can I find documentation in the law that says I can or I can't?
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#1349182 - 02/25/10 05:33 PM Re: community involvement swthomeala
Kathleen O. Blanchard Offline

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I guess I don't understand the issue either. The program is for individuals (and small businesses) with credit history problems. If a business that does not have credit history issues wants to participate just explain why it wouldn't help them - someone without credit issues doesn't need help.

Set a time frame during which you will have this program and if a business approaches the bank later, you say the program has ended.
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#1349814 - 02/26/10 05:44 PM Re: community involvement Kathleen O. Blanchard
swthomeala Offline
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Georgia
The program is not open to small businesses. That is where I think the issue lies. We have a program called A.C.A.P where individuals go thru a 2 hour seminar about why good credit is necessary to open and keep a checking account, etc. We then let them open a special checking account that is monitored for the next 6 months for overdrafts, etc. [they were not originally eligible for an account because of their credit reports]. If at the end of the 6 months they have not violated the stipulations of the special account - we then transfer them to a "regular" checking account with no more monitoring. OKAY - we want to open this program up ONLY for the small business customers who are going thru the grant related program because they might not otherwise qualify for a checking account and monitor them the same as the ACAP folk. Are we violating a law/regulation if we turn down any other small business who may hear of this special stipulation in the ACAP program? We don't know how long the small business grant money will last - so we can't put a date on the end of the program. I hope this helps explain it a little better.
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#1349823 - 02/26/10 05:55 PM Re: community involvement swthomeala
Pale Rider Offline
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under the Lone Star
...few fair lending rules, if any, apply to business owners since they are assumed to be sophisticated users of banking services and don't need the protection of our regulators....

I am a bit concerned with all the discussion above because I haven't seen any mention of serving a majority of low to mod individuals or families.

Will you have the metrics to show that this program or programs serve LMI? Middle income people have less then perfect credit.
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#1349832 - 02/26/10 06:03 PM Re: community involvement Pale Rider
Kathleen O. Blanchard Offline

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If the bank has a program for small businesses, that is separate from serving LMI individuals. That is what I am discussing in my comments.

If the program is to enable individuals to QUALIFY to open small businesses, that would need to serve LMI individuals.

What I am not seeing clarified is whether these are existing small businesses (LMI not an issue) or will be new small businesses to be formed after going through this program (LMI participants an issue). The conversation jumps back and forth so it is hard to answer the question until I know what it is.

If the folks you are calling "small business customers" are not yet owners of small businesses, you are dealing with individuals and for CRA must be dealing primarily LMI individuals.

If they are existing small business owners, there are generally no rules for fair lending although banks have had fair lending issues on commercial lending for discriminating on a prohibited basis in their lending. Blatant discrimination will always get you into trouble.
Last edited by MS Kaybee; 02/26/10 06:07 PM. Reason: added last comment
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#1349850 - 02/26/10 06:23 PM Re: community involvement Kathleen O. Blanchard
Kathleen O. Blanchard Offline

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Let me just add that if an existing business owner asks about this program, which seems to be for individuals who do not YET have a small business, you merely respond as I said above that they do not qualify for this particular program (which is for people who want a small business, not for those who have a small business).
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Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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#1351746 - 03/03/10 07:03 PM Re: community involvement Kathleen O. Blanchard
swthomeala Offline
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Joined: Oct 2005
Posts: 39
Georgia
Thank you so much for your responses - the program is designed for low to moderate income individuals with less than perfect credit - who at the end of the program will get to borrow grant money to open up the small business and will have become a small business by the time they are ready to open an account.
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