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#2234291 - 04/06/20 03:28 PM PPP Loans and Adverse Action
Banker57 Offline
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Joined: Jul 2010
Posts: 439
Minnesota
Once we reach our designated lending limit for the PPP loans, what type of adverse action reason should be stated? If we simply state that we can no longer offer these loans, I feel that will have a reputational effect.

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#2234297 - 04/06/20 04:07 PM Re: PPP Loans and Adverse Action Banker57
rlcarey Online
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What else do you have in mind? You have to tell them the truth.
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#2234552 - 04/09/20 08:38 PM Re: PPP Loans and Adverse Action Banker57
Mel in WA Offline
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We are also looking for a nice way to state this on the AAN, because it's going to happen.....

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#2234607 - 04/10/20 05:31 PM Re: PPP Loans and Adverse Action Banker57
TryingtoComply Offline
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The West
If you don't offer a product, it's not adverse action. They have to be applying for a product you offer.
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#2234613 - 04/10/20 05:53 PM Re: PPP Loans and Adverse Action Banker57
Mel in WA Offline
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We have several applications in the queue and I anticipate we will run out of money before they can all be processed. I know they will need an AAN with a very carefully crafted statement as to why they are being denied.

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#2234648 - 04/13/20 01:41 PM Re: PPP Loans and Adverse Action Banker57
DeeQ Offline
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"Program no longer available" comes to mind for a AAN reason.
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#2234687 - 04/13/20 05:33 PM Re: PPP Loans and Adverse Action Banker57
David Dickinson Offline
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Quote
If you don't offer a product, it's not adverse action. They have to be applying for a product you offer.

I don't believe that just because you are out of SBA funding does not mean that you don't have to provide an AAN. You do offer SBA loans. You did offer the PPP program (which is specific to terms, not a product). You also offer small business loans.
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#2234692 - 04/13/20 05:56 PM Re: PPP Loans and Adverse Action Banker57
rlcarey Online
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There are going to be a lot AANs floating around. $205B of the $350B according to the ABA this morning is already committed.
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#2234809 - 04/14/20 09:34 PM Re: PPP Loans and Adverse Action Banker57
Just a girl Offline
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Our bank made the decision to offer PPP loans only to existing customers. I am being asked if an AAN needs to be provided to those non-customers from whom we do not accept an application.

If so, will someone please point me to the specific guidance I need to support my communication to executive management? Please don't copy and paste Reg. B as a response. I have read it and really just want some plain language to help me explain the requirement, if applicable. I am very frustrated at this point.

Thank you.

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#2234812 - 04/14/20 10:41 PM Re: PPP Loans and Adverse Action Banker57
rlcarey Online
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If you receive an application and if you refuse to consider it, for whatever reason for a product that you are currently offering to others, you are taking adverse action. I am really not sure how much simpler it could be?
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#2234817 - 04/15/20 01:06 AM Re: PPP Loans and Adverse Action Banker57
Kristi Offline
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To go along with AA for the PPP loans... if we deny a request because they don't meet some of the requirements, do we need to list out exactly what part(s) they failed to meet or can we put "does not meet requirements for the PPP loan"?

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#2234823 - 04/15/20 01:10 PM Re: PPP Loans and Adverse Action Banker57
Rocky P Offline
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Florida
You need to be specific with the reasons. The purpose of the AAN is to give the applicant the ability to correct the deficiencies to get the loan
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#2234824 - 04/15/20 01:26 PM Re: PPP Loans and Adverse Action rlcarey
Just a girl Offline
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Management in NOT ACCEPTING applications. If someone calls, they are being told we do not accept them from non-customers. My question is whether or not we have to go as far as getting enough information to send an AAN.

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#2234828 - 04/15/20 01:50 PM Re: PPP Loans and Adverse Action Banker57
rlcarey Online
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As long as you feel that those actions do not violation 1002.4(b), then no. However, if you get an application and later determine they are not a customer, then yes.
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#2234838 - 04/15/20 02:50 PM Re: PPP Loans and Adverse Action Banker57
Just a girl Offline
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Thank you, Randy. Yes, I'm not thrilled about the whole situation I have CYA procedures in full force right now. I appreciate the response.

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#2234866 - 04/15/20 05:55 PM Re: PPP Loans and Adverse Action Banker57
nancyr Offline
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Just to clarify, if the SBA declines the PPP loan, does the FI have to send the adverse??

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#2234888 - 04/15/20 07:33 PM Re: PPP Loans and Adverse Action Banker57
John Burnett Offline
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The SBA sure isn't going to do it. Tag, you're "it"!
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#2234915 - 04/15/20 09:21 PM Re: PPP Loans and Adverse Action Banker57
David Dickinson Offline
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[quote]Management in NOT ACCEPTING applications. If someone calls, they are being told we do not accept them from non-customers. My question is whether or not we have to go as far as getting enough information to send an AAN.[quote]
I want to expand on this. An application is an ORAL or written request for credit. If someone starts to verbally apply, it's tough to say you didn't get an application. Now, I agree that you can stop them (and technically, not trigger an AAN) but you must be careful that you aren't discouraging people from applying. Reg B prohibits that too as Randy pointed out with his reference to 1002.4(b). I think it's best to clearly let people know you are taking applications for PPP loans from bank customers first and then you'll try to accommodate non-customers. Non-customers should go to their own institutions. If you receive an application from a non-customer, you can sit on it for a few days and see if it's possible to get to them. If not, you'll need to send them an AAN stating "not a customer of the bank" as a reason for denial.

Second, do you have to try to get info to send an AAN? If you can send an AAN, you should. If they hang up on you and you don't know who they are, you don't have to send an AAN obviously. There's a commentary stating this in 1002.9 (I believe - off the top of my head).
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#2234977 - 04/16/20 04:53 PM Re: PPP Loans and Adverse Action Banker57
Christy Campbell Offline
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Joined: Apr 2020
Posts: 28
Now that PPP funds are depleted, AAN will need to be sent. I saw the above recommendation for denial reason as "program no longer available". Did we determine that is a sufficient option?

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#2234982 - 04/16/20 05:11 PM Re: PPP Loans and Adverse Action Banker57
David Dickinson Offline
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I would say "program not currently available" as they may fund it again or the Treasury may buy some of the loans to make more dollars available.
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#2234983 - 04/16/20 05:12 PM Re: PPP Loans and Adverse Action Banker57
David Dickinson Offline
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Central City, NE
You could also offer a counter-offer with a "typical" small business loan that you offer.
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#2234994 - 04/16/20 05:37 PM Re: PPP Loans and Adverse Action Banker57
Christy Campbell Offline
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Joined: Apr 2020
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Thank you! I haven't seen information regarding the possibility of the Treasury buying loans. Where is that recommendation coming from?

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#2234996 - 04/16/20 05:38 PM Re: PPP Loans and Adverse Action Banker57
ahou Offline
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So the timing of the AAN is 30 days from application or 30 days from today, the day funds ran out?
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#2234998 - 04/16/20 05:50 PM Re: PPP Loans and Adverse Action Banker57
Christy Campbell Offline
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Joined: Apr 2020
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I would believe it to be 30 days from the date a completed application was received

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#2235001 - 04/16/20 06:16 PM Re: PPP Loans and Adverse Action Banker57
Christy Campbell Offline
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Joined: Apr 2020
Posts: 28
Would a copy of the AAN and the application be all we need keep on these for retention purposes?

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