On a business loan application, do we need to make a decision or send out a denial within 30 days to be in compliance with regulations?
In regards to the timeline on making a credit decision, it depends on the size of the business. If the business had less than 1m in gross revenues, then you would need to follow the time constraints in (a)(1)--30 days and 90 days. If over the gross revenues were over 1m, then you would only need to notify the applicant in a "reasonable" time.
Additionally for businesses with gross revenues of over 1m, the statement of reasons for adverse action is required only if the business applicant makes a written request within 60 days of notification of the creditor. This is also in contrast with the consumer applicant where a statement of reasons must be given with the notification of adverse action.
Finally, many banks have chosen to follow the consumer applicant guidelines for the sake of uniformity. This is absolutely acceptable.
For reference, see 12 CFR § 1002.9(a)(3):
(3) NOTIFICATION TO BUSINESS CREDIT APPLICANTS.
(i) With regard to a business that had gross revenues of $1 million or less in its preceding fiscal year (other than an extension of trade credit, credit incident to a factoring agreement, or other similar types of business credit), a creditor shall comply with paragraphs (a)(1) and (2) of this section, except that:
(A) The statement of the action taken may be given orally or in writing, when adverse action is taken;
(B) Disclosure of an applicant's right to a statement of reasons may be given at the time of application, instead of when adverse action is taken, provided the disclosure contains the information required by paragraph (a)(2)(ii) of this section and the ECOA notice specified in paragraph (b)(1) of this section;
(C) For an application made entirely by telephone, a creditor satisfies the requirements of paragraph (a)(3)(i) of this section by an oral statement of the action taken and of the applicant's right to a statement of reasons for adverse action.
(ii) With regard to a business that had gross revenues in excess of $1 million in its preceding fiscal year or an extension of trade credit, credit incident to a factoring agreement, or other similar types of business credit, a creditor shall:
(A) Notify the applicant, within a reasonable time, orally or in writing, of the action taken;
(B) Provide a written statement of the reasons for adverse action and the ECOA notice specified in paragraph (b)(1) of this section if the applicant makes a written request for the reasons within 60 days of the creditor’s notification.
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