Compliance Alliance Q&A 6/9/2020

Q: An applicant applied for a Paycheck Protection Program (PPP) loan via our website, and in reviewing the application, we determined the business is an ineligible industry.  Would this be considered an application requiring an adverse action notice? 
 

A: While this hasn't been specifically addressed in the PPP context, conservatively the Bank would treat this as an application requiring an adverse action notice as the Bank communicated the decision to the consumer (they were ineligible based on information related to them). 
 
3. When an inquiry or prequalification request becomes an application. A creditor is encouraged to provide consumers with information about loan terms. However, if in giving information to the consumer the creditor also evaluates information about the consumer, decides to decline the request, and communicates this to the consumer, the creditor has treated the inquiry or prequalification request as an application and must then comply with the notification requirements under § 1002.9. Whether the inquiry or prequalification request becomes an application depends on how the creditor responds to the consumer, not on what the consumer says or asks. (See comment 9-5 for further discussion of prequalification requests; see comment 2(f)-5 for a discussion of preapproval requests.)

Reg.B: https://www.consumerfinance.gov/policy-compliance/rulemaking/regulations/1003/4/#4-a-16-Interp-3 

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