Yes, you may provide verbal notification of an adverse action to a business loan applicant. Regulation B permits creditors to provide businesses with adverse action notices “orally or in writing.” This rule applies to all business applicants, whether their annual gross revenues were less than or greater than $1 million. For a business with annual gross revenue that was less than $1 million in its preceding fiscal year, an adverse action notice is required within thirty days after receiving the completed application.
Additionally, the IBA Forms Library on GoToIBA.com has several forms related to adverse action notices for commercial applicants: (1) sample procedures, (2) a template for a commercial adverse action notice, and (3) a template for an initial commercial adverse action notice. (Note that providing a written adverse action notice for commercial applicants is optional, since Regulation B permits the notice to be provided orally or in writing.)
For resources related to our guidance, please see:
- Regulation B, 12 CFR 1002.9(a)(3)(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 [by providing the adverse action notice within 30 days after receiving a completed application], except that: (A) The statement of the action taken may be given orally or in writing, when adverse action is taken; . . .”)
- Regulation B, 12 CFR 1002.9(a)(3)(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; . . .”)
- Regulation B, 12 CFR 1002.9(a)(1) (“A creditor shall notify an applicant of action taken within: (i) 30 days after receiving a completed application . . . .”)