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BOARD OF GOVERNORS

OF THE

FEDERAL RESERVE SYSTEM

WASHINGTON, D.C. 20551 

DIVISION OF SUPERVISION AND 

REGULATION

DIVISION OF CONSUMER AND

COMMUNITY AFFAIRS

SR 20-7 

CA 20-5 

March 30, 2020 

TO THE OFFICER IN CHARGE OF SUPERVISION AT EACH FEDERAL RESERVE 

BANK AND TO INSTITUTIONS SUPERVISED BY THE FEDERAL RESERVE

SUBJECT: Joint Statement Encouraging Responsible Small-Dollar Lending in Response to 

COVID-19 

Applicability: This letter is relevant to all institutions supervised by the Federal Reserve.

On March 26, 2020, the Federal Reserve and four other federal financial regulatory 

agencies issued a joint statement encouraging banks, savings institutions, and credit unions to 

offer responsible small-dollar loans to consumers and small businesses in response to 

COVID-19.1 A supervised institution’s small-dollar lending activity could help customers meet 

their needs for credit due to temporary cash-flow imbalances, unexpected expenses, or income 

short-falls during periods of economic stress or disaster recoveries. This guidance follows other 

recent issuances of the agencies to encourage financial institutions to meet the financial services 

needs of their customers who have been affected by COVID-19.2

Reserve Banks are asked to distribute this letter to the Federal Reserve-supervised 

institutions in their districts, as well as to their supervisory and examination staff. If Federal 

Reserve-supervised financial institutions have questions about the guidance set forth in this 

letter, they are encouraged to contact their primary contact at the responsible Federal Reserve 

Bank. In addition, questions may be sent via the Board’s public website.3

Michael S. Gibson Eric S. Belsky

Director Director

Division of Supervision Division of Consumer and

and Regulation Community Affairs

 

1 See March 26, 2020, Board press release at: 

https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200326a.htm 

2 Refer to the Board’s public website for COVID-19 related guidance at: https://www.federalreserve.gov/covid19.htm

3 See http://www.federalreserve.gov/apps/contactus/feedback.aspx 
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Attachment:

• Joint Release, “Encouraging Responsible Small-Dollar Lending in Response to COVID19” (March 26, 2020). 

Cross References:

• SR Letter 20-4/CA Letter 20-3, “Supervisory Practices Regarding Financial Institutions 

Affected by Coronavirus”

• CA Letter 20-4, “CRA Consideration for Activities in Response to the Coronavirus” 

 
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Board of Governors of the Federal Reserve System

Consumer Financial Protection Bureau

Federal Deposit Insurance Corporation

National Credit Union Administration

Office of the Comptroller of the Currency

Joint Statement Encouraging Responsible Small-Dollar 

Lending in Response to COVID-19 

The Board of Governors of the Federal Reserve System (Federal Reserve), the Federal Deposit 

Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Office of 

the Comptroller of the Currency (OCC), and the Consumer Financial Protection Bureau (CFPB) 

(collectively, “the agencies”) recognize the potential for the Coronavirus Disease (referred to as 

COVID-19) to adversely affect the customers and operations of banks, savings associations and 

credit unions (collectively, “financial institutions”). On March 9, 2020, the federal financial 

institution regulatory agencies and state bank regulators issued a statement to encourage financial 

institutions to meet the financial services needs of their customers and members in areas affected 

by COVID-19.1

 Additionally, on March 19, 2020, the Federal Reserve, FDIC, and OCC issued a 

joint statement on Community Reinvestment Act (CRA) consideration for activities in response 

to COVID-19, stating that for CRA purposes, the agencies will favorably consider retail banking 

and lending activities that meet the needs of affected low- and moderate-income individuals, 

small businesses, and small farms, consistent with safe and sound banking practices and 

applicable laws, including consumer protection laws.

2

 This statement noted such activities could 

include offering short-term, unsecured credit products for creditworthy borrowers.

The agencies are issuing this statement to specifically encourage financial institutions to offer 

responsible small-dollar loans to both consumers and small businesses. The agencies recognize 

the important role that responsibly offered small-dollar loans can play in helping customers meet 

their needs for credit due to temporary cash-flow imbalances, unexpected expenses, or income 

short-falls during periods of economic stress or disaster recoveries. 

Federally supervised financial institutions are well-suited to meet the credit needs of customers 

affected by the current COVID-19 emergency. Many financial institutions may offer products 

that could be used or modified to help meet these customers’ needs, in conformity with 

applicable laws and regulations. The current regulatory framework allows financial institutions

to make responsible small-dollar loans. Such loans can be offered through a variety of loan

structures that may include, for example, open-end lines of credit, closed-end installment loans, 

 

1

 Joint Release, “Agencies Encourage Financial Institutions to Meet Financial Needs of Customers and Members 

Affected by Coronavirus” (March 9, 2020). 

2

 Joint Statement, “Pandemic Planning: Joint Statement on CRA Consideration for Activities in Response to 

COVID-19” (March 19, 2020). 
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or appropriately structured single payment loans.3

 For borrowers who experience unexpected 

circumstances and cannot repay a loan as structured, financial institutions are encouraged to 

consider workout strategies designed to help enable the borrower to repay the principal of the 

loan while mitigating the need to re-borrow. For all products, financial institutions should offer 

loans in a manner that is consistent with safe and sound practices, provides fair treatment of 

consumers, and complies with applicable statutes and regulations, including consumer protection 

laws.4 

The agencies also recognize that responsible small-dollar loans can benefit financial institution

customers in more normalized times when unexpected expenses occur or there are temporary 

income short-falls. The agencies are working on future guidance and lending principles for 

responsible small-dollar loans to facilitate the ability of financial institutions to more effectively 

meet the ongoing credit needs of their communities and customers. 

 

3

 Financial institutions may, but are not required to, consult with their primary federal regulator about small-dollar 

loan products that they offer or plan to offer to customers affected by COVID-19.

4 See, e.g., Interagency Guidelines Establishing Standards for Safety and Soundness at 12 CFR 30, Appendix A

(OCC); 12 CFR 208, Appendix D-1 (Federal Reserve); and 12 CFR 364, Appendix A (FDIC).