Business Loan Denial Notice
Answer by Jim Bedsole, BOL Guru Guru Bio
Question: Are banks required to give a written denial notice to business loan customers if a loan request is denied? If not, why is there a retention period of 12 months for loans with revenues under $1,000,000 and 60 days for loans with revenues $1,000,000 or greater? How would you retain an oral record of denial?
Answer: In reading your question, and in a quick look at Regulation B, it seems to me that you must be operating only from some summary procedure and have not reviewed the regulation itself, as the answers to your questions are pretty clearly stated directly in the regulation. See 12 CFR 202.9(a)(3) for a discussion of the specific adverse action requirements for business loans. Generally speaking, banks can give adverse action notice verbally for business loans. In 12 CFR 202.12(b) the retention requirement of 12 months applies to the any application itself, other information in the application file, any written adverse action notice, or if verbal notice, any notation or memorandum about the notification made by the lender in its files, such as when and to whom the notice was given and by whom.
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