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Reg B Definition of Credit Request Or App for LLC

Answered by: 
Randy Carey
Andy Zavoina | CRCM

Question: 
With regards to Reg B/definitions on a credit request or application. If an applicant comes to us and indicates that he would like to apply for credit but would like to apply for credit in the name of a LLC or business entity that is yet to be formed; is that a credit request, do we have a credit request and are we required under Reg B to enter the request for credit?
Answer: 

from Randy: Getting paperwork to ensure that the loan is eventually made to a legal entity can occur at a later date. Even though the entity has not yet been formed, it is a valid request for credit.

Answer: 

from Andy: I will take the contrarian view so there won't be a definite yes or no here. Assuming there is no coapplicant there is no entity to apply. You could discuss "what ifs" but if you accepted an application and then denied the request there is no entity to provide the adverse action notice to. No entity yet exists to provide paperwork.

First published on 03/03/2014

Filed under: 
Compliance
Filed under compliance as: 
Reg. B

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