INTERAGENCY LENDING PRINCIPLES FOR OFFERING RESPONSIBLE SMALL-DOLLAR LOANS

On May 20, 2020 the Federal Reserve Board, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the National Credit Union Administration jointly issued the Interagency Lending Principles for Offering Responsible Small-Dollar Loans. The agencies:

  • Recognize the important role that responsibly offered small-dollar loans can play in helping customers meet their ongoing needs for credit from temporary cash-flow imbalances, unexpected expenses, or income shortfalls, including during periods of economic stress, natural disasters, or other extraordinary circumstances such as the public health emergency created by COVID-19.
  • Are issuing the “Interagency Lending Principles for Offering Responsible Small-Dollar Loans” to encourage supervised banks, savings associations, and credit unions to offer responsible small-dollar loans to customers for consumer and small business purposes.
  • Published both The Principles and a Fact Sheet.

 

Financial institutions seeking to develop new programs or expand existing responsible small-dollar lending programs should do so in a manner consistent with sound risk management principles, inclusive of appropriate policies.  Well-managed programs:

  • Will generally align with the financial institution’s overall business plans and strategies;
  • Could include effectively managed deployment of innovative technology or processes for customers who may not meet a financial institution’s traditional underwriting standards;
  • Can be implemented in-house or through effectively managed third-party relationships;
  • Offer responsible lending products in a manner that ensures fair access to financial services, fair treatment of customers, and compliance with applicable laws and regulations, including fair lending and consumer protection laws.

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