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#2234291 - 04/06/20 03:28 PM
PPP Loans and Adverse Action
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Gold Star
Joined: Jul 2010
Posts: 439
Minnesota
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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
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10K Club
Joined: Jul 2001
Posts: 84,368
Galveston, TX
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What else do you have in mind? You have to tell them the truth.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#2234552 - 04/09/20 08:38 PM
Re: PPP Loans and Adverse Action
Banker57
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Diamond Poster
Joined: Mar 2013
Posts: 1,302
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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
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Diamond Poster
Joined: Apr 2013
Posts: 2,267
The West
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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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TryingToComply CRCM
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#2234613 - 04/10/20 05:53 PM
Re: PPP Loans and Adverse Action
Banker57
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Diamond Poster
Joined: Mar 2013
Posts: 1,302
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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
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10K Club
Joined: Dec 2002
Posts: 40,766
Turnpike Exit 10
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"Program no longer available" comes to mind for a AAN reason.
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Get your facts first, then you can distort them as you please. - Mark Twain
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#2234687 - 04/13/20 05:33 PM
Re: PPP Loans and Adverse Action
Banker57
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10K Club
Joined: Nov 2000
Posts: 18,765
Central City, NE
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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
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10K Club
Joined: Jul 2001
Posts: 84,368
Galveston, TX
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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.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#2234809 - 04/14/20 09:34 PM
Re: PPP Loans and Adverse Action
Banker57
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New Poster
Joined: May 2018
Posts: 18
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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
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10K Club
Joined: Jul 2001
Posts: 84,368
Galveston, TX
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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?
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#2234823 - 04/15/20 01:10 PM
Re: PPP Loans and Adverse Action
Banker57
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Power Poster
Joined: Jun 2003
Posts: 7,729
Florida
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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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Integrity. With it, nothing else matters. Without it, nothing else matters.
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#2234824 - 04/15/20 01:26 PM
Re: PPP Loans and Adverse Action
rlcarey
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New Poster
Joined: May 2018
Posts: 18
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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
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10K Club
Joined: Jul 2001
Posts: 84,368
Galveston, TX
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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.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#2234838 - 04/15/20 02:50 PM
Re: PPP Loans and Adverse Action
Banker57
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New Poster
Joined: May 2018
Posts: 18
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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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#2234888 - 04/15/20 07:33 PM
Re: PPP Loans and Adverse Action
Banker57
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10K Club
Joined: Oct 2000
Posts: 40,086
Cape Cod
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The SBA sure isn't going to do it. Tag, you're "it"!
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John S. Burnett BankersOnline.com Fighting for Compliance since 1976 Bankers' Threads User #8
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#2234915 - 04/15/20 09:21 PM
Re: PPP Loans and Adverse Action
Banker57
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10K Club
Joined: Nov 2000
Posts: 18,765
Central City, NE
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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
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Junior Member
Joined: Apr 2020
Posts: 40
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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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#2234994 - 04/16/20 05:37 PM
Re: PPP Loans and Adverse Action
Banker57
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Junior Member
Joined: Apr 2020
Posts: 40
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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
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Power Poster
Joined: Aug 2002
Posts: 3,094
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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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Opinions are my own and not of my employer.
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#2234998 - 04/16/20 05:50 PM
Re: PPP Loans and Adverse Action
Banker57
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Junior Member
Joined: Apr 2020
Posts: 40
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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
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Junior Member
Joined: Apr 2020
Posts: 40
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Would a copy of the AAN and the application be all we need keep on these for retention purposes?
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