FDIC Consumer News
FDIC Consumer News - Winter 2011/2012
Common Questions to the FDIC from Small Businesses
The new law enhanced certain Small Business Administration (SBA) loans and created other opportunities for borrowers. For example, it permanently increased maximum loan amounts for some SBA loan programs and allowed some small businesses to refinance mortgages on their owner-occupied commercial real estate (through September 2012). For more information on the new loan provisions, go to www.sba.gov/content/small-business-jobs-act-2010. For more about SBA loans, go to https://www.sba.gov/funding-programs/loans.
In addition, the law created the Small Business Lending Fund at the U.S. Treasury Department to provide capital for loans from qualified “community” banks. To find participating banks near you and learn more about Treasury programs for small businesses, see More Help for Small Businesses.
A home equity line of credit is a loan with an established credit limit that the borrower may draw on at any time — similar to a credit card — that uses the borrower’s home as collateral. Banks can “freeze” (suspend) access to a home equity line or reduce the credit limit in certain situations — for instance, if the value of your home declines significantly below the appraised value or if the bank reasonably believes you will be unable to make payments because of a drastic change in your financial circumstances. However, the lender’s action must be in compliance with applicable federal and state laws.
“Banks will typically consider reinstating credit once the issue that caused the freeze or reduction is cleared up, so you should notify the bank of any positive developments,” said Susan Boenau, Chief of the FDIC’s Consumer Affairs Section. “You also may be able to find another bank willing to provide you with a home equity line of credit, so it doesn’t hurt to shop around.”
First, remember that the FDIC and other regulators encourage financial institutions to meet the credit needs of their creditworthy customers. Although banks do set their own lending policies and procedures, they must comply with federal and state laws and regulations. For example, a bank may lower the credit limit on a home equity line as long as it meets the legal requirements to do so. If your current bank’s revised loan-approval guidelines make it difficult for you to qualify for a loan renewal, you may want to check with other banks to see if they can offer you a loan that suits your needs.
While the Electronic Fund Transfer Act and its implementing regulations limit liability for fraud, theft or other unauthorized transactions involving personal (consumer) accounts, these protections do not apply to business accounts. “If you believe money was wrongfully debited from your business account, notify your bank immediately and ask what its policy is,” said Heather St. Germain, an FDIC Consumer Affairs Specialist. “Although federal law does not safeguard business accounts like it does consumer accounts, state laws, industry standards and your deposit agreements may provide certain protections.”
To call or e-mail the FDIC with questions or concerns, see More Help for Small Businesses.
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