We are thinking of using a third party to complete background checks on businesses and individuals in support of commercial loan requests. The reports include criminal history, etc. which should be considered public information. We may deny a loan based on information obtained from these background checks. The Bank is wanting to call this "Due Diligence" and include in all written procedures.

Should we have the customer sign a form giving permission to use this information in support of a loan request, just like running a credit report given we may use it against them? Any other comments as to how we can legally use this type of background check?

To me no different than the employment side. The applicant signs a form giving the Bank permission to run a background check.

I think on commercial loans it is a little more difficult because commercial loans tend to be set up as corporations. Remember there are costs associated with this so who is going to pay for these background checks.

The Bank will be paying for this service, no cost to the customer.