First, we note that the Regulation Z disclosure you mentioned would not apply to a business loan. 12 CFR 1026.1(c)12 CFR 1026.3(a)(1).

Illinois’s Uniform Commercial Code (UCC) does allow you to take a security interest in a deposit account held at your institution. 810 ILCS 5/9-203. You must have “control” over the deposit account in order to perfect your security interest in the account. 810 ILCS 5/9-314(b). If the deposit account is held at your bank, you will be deemed to have the required “control” over the account and will have a perfected security interest in the account (even though the debtor will still have the right to dispose of the account funds). 810 ILCS 5/9-104(a)(1); (b). If the deposit account is held at another bank, you must enter into a control agreement with the bank and the debtor. 810 ILCS 5/9-104(a)(2).

However, we do not believe you would be able to put a hold on the account funds that secure the debt. Under Regulation CC, the customer has the right to all deposited funds in the account once any hold periods have passed. 12 CFR 229.12. This would not apply to savings accounts (though this may depend on your account agreement with the customer). 12 CFR 229.2(a). That said, if the deposit account is held at your bank, you would have any applicable rights of offset in the deposit account (depending on the terms of your account agreement). Selby v. DuQuoin State Bank, 223 Ill.App.3d 105, 107 (5th Dist. 1991).

Finally, we note that the TAG program will expire at the end of this year and must be extended by congressional action. We cannot predict whether the program will be extended, though the ABA is supporting a two-year extension.