State offers guidance about loans during virus outbreak

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Facing uncertain financial markets during a quickly-slowing economy, banking commissioner Jorge Perez issued guidance to Connecticut state-charted financial institutions on ways to provide relief to assist Connecticut consumers and small businesses in response to the coronavirus (COVID-19). The guidance comes in response to Gov. Ned Lamont’s directive to state agencies to identify ways to assist Connecticut residents, businesses, and non-profit organizations.

“As the state continues to navigate uncharted waters amid this public health crisis, the Department of Banking will assist our state-charted banks and credit unions in their efforts to help consumers and small businesses and non-profits through these difficult times,” said Perez in a press release.

The guidance urges Connecticut state-charted banks and credit unions to work with borrowers consistent with safe and sound banking practices. These efforts can include easing credit terms for new loans, waiving overdraft fees, waiving late fees for loan balances, increasing the number of allowed money market withdrawals, waiving CD early withdrawal penalties, and offering payment accommodations such as allowing borrowers to defer some payments or extending the payment due dates. The department also asks institutions to communicate with their partner companies, like servicers and collection agencies, so consumers and small businesses know all possible accommodations.

“Any modifications to existing loans that are deemed prudent by financial institutions in light of the circumstances will not be subject to regulatory criticism,” said Perez in a press release.

The guidance also urges financial institutions to make themselves available to answer customer questions and make reasonable accommodations during the outbreak. Financial institutions have ensured that consumers have access to banking services by continuing to provide drive-up windows, night deposits, ATMs and online banking.

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This guidance reinforces several actions the state has taken under Gov. Lamont to help small businesses who have participated in its various lending programs. For example, the state is extending small business express loans for 90 days and offering a 90-day grace period on making payments. Other actions taken by the state at this time include the delaying of payment of some business taxes by 60 to 90 days.

Lamont has successfully applied for Small Business Administration disaster assistance, and eligible small businesses are encouraged to apply for credit at www.sba.gov/disaster.