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504 Loan debenture rates reduced

The Small Business Administration has announced updated interest rates for the SBA 504 Loan Program offered by Certified Development Companies (CDCs). Small businesses can now apply for the lowest interest rates since July 2018; the program is now allowing 20 and 25-year interest rates of 2.214% and 2.269%, respectively.

The SBA 504 Loan Program is authorized under Title V of the Small Business Investment Act of 1958. The core mission of the program is to provide long-term financing to small businesses for the purchase or improvement of land, buildings, and major equipment, to facilitate the creation or retention of jobs and to support local economic development. Under the program, loans are made in conjunction with private sector lenders to small businesses by CDCs, which are certified and regulated by the SBA to promote economic development within their community. Typical project financing requires a minimum 10% investment by the borrower, a 50% conventional first mortgage from a third-party lender (usually a bank or credit union), and a second mortgage financing up to 40% of eligible project costs.



The SBA continues to fine-tune its rules under the Paycheck Protection Program, adding three new questions to its FAQs on PPP Loan Forgiveness. The new FAQs address forgiveness applications for PPP borrowers who also received Economic Injury Disaster Loan advances.

The SBA also added questions 50 and 51 to its General FAQs on Paycheck Protection Loans. Question 50 clarifies that payment or nonpayment of fees of an agent or other third party don't affect SBA's guarantee of a PPP loan or its payment of fees to lenders. Question 51 states that payments for group health care benefits include premiums for vision and dental benefits.


Fed issues Outstanding CRA rating

Our review of the Federal Reserve Board's Community Reinvestment Act Evaluations and Ratings Search page has revealed that the Federal Reserve Banks made public their ratings of five CRA evaluations in July. Four of the evaluations were rated "Satisfactory." Congratulations to Banco Popular de Puerto Rico, San Juan, on its "Outstanding" rating!


Fed revises Municipal Liquidity Facility pricing

The Federal Reserve Board has announced revised pricing for its Municipal Liquidity Facility (MLF). The revised pricing reduces the interest rate spread on tax-exempt notes for each credit rating category by 50 basis points and reduces the amount by which the interest rate for taxable notes is adjusted relative to tax-exempt notes. The changes will ensure the MLF continues to provide an effective backstop to assist U.S. states and local governments as they weather the pandemic.


CFPB adds Payday Lending Rule FAQs

The Consumer Financial Protection Bureau has posted several additional FAQs on compliance with the Payday Lending Rule. The FAQs are presented in three groups:

  • Covered loans (22 questions, with 7 added or updated)
  • Payment transfers (11 questions, with 3 added or updated)
  • Payment notices (1 question, which was added or updated)


    OCC CRA evaluation ratings released

    The OCC has released a list of 30 Community Reinvestment Act (CRA) performance evaluations that became public in July. The possible ratings are outstanding, satisfactory, needs to improve, and substantial noncompliance. Of the evaluations listed, 21 are rated satisfactory.

    We congratulate these nine institutions, which were rated outstanding:


    Consumer credit falls again in second quarter

    The Federal Reserve Board's G.19 data indicate that consumer credit decreased at a seasonally adjusted annual rate of 6-3/4 percent during the second quarter of 2020. Revolving credit decreased at an annual rate of 31-3/4 percent, while nonrevolving credit increased at an annual rate of 2 percent. In June, revolving credit decreased at an annual rate of 2-3/4 percent, while nonrevolving credit increased at an annual rate of 4-1/4 percent.


    HUD physical inspections to resume

    Secretary Carson has announced HUD will resume Real Estate Assessment Center (REAC) inspections of HUD multifamily and public housing properties and units under strict safety protocols during the national recovery from the COVID-19 pandemic. REAC inspections are the assessment tool that ensures HUD-assisted properties meet federal standards of health, safety, and accessibility. The inspections were paused due to the Coronavirus outbreak in March of 2020.


    Consumer loan company pays $21.7M for FCPA violations

    The Securities and Exchange Commission has announced that World Acceptance Corporation, a South Carolina-based consumer loan company, has agreed to pay $21.7 million to resolve charges that it violated the Foreign Corrupt Practices Act (FCPA).

    The SEC Order in the matter states the Commission found that from at least December 2010 through June 2017, World Acceptance Corporation’s former Mexican subsidiary, WAC de Mexico S.A. de C.V., paid more than $4 million in bribes to Mexican government officials and union officials to secure the ability to make loans to government employees and ensure that those loans were repaid in a timely manner. According to the order, WAC Mexico paid the bribes in a variety of ways, including by depositing money into bank accounts linked to the officials and by hiring an intermediary to distribute large bags of cash among the officials. The SEC found that the bribes were inaccurately recorded in World Acceptance Corporation’s books and records as legitimate business expenses. The order also states that World Acceptance Corporation lacked internal accounting controls sufficient to detect or prevent the payments of such bribes and that management lacked the appropriate tone at the top regarding internal audit and compliance, thereby undermining the effectiveness of those functions.

    The order requires that the company cease and desist from violating the anti-bribery, books and records, and internal controls provisions of the FCPA, and pay $17.826 million in disgorgement, $1.9 million in prejudgment interest, and a $2 million penalty.


    Update on Fed's COVID-19 lending facilities

    The Federal Reserve Board has released a report with an update concerning lending facilities established by the Board under section 13(3) of the Federal Reserve Act in response to the COVID-19 pandemic.


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