Use of Wisconsin Consumer Act Loan Forms
Lending procedures should be reviewed to make certain that Consumer Act forms, such as the WBA-455 Promissory Note are used only in transactions which you intend to be covered by the Wisconsin Consumer Act. In some cases lenders have used the forms in business transactions which are not generally subject to the Act.
Provisions of these forms expressly follow the limitations and requirements of the Wisconsin Consumer Act. Most contain a sentence stating that the borrower agrees to be governed by the Wisconsin Consumer Act for all purposes. Wis. Stat. s. 421.301(17), in defining "customer" states that a person, which would include a corporation, not otherwise covered by the Act may agree to be governed by it. When this occurs that person becomes a customer for all purposes and enjoys the rights extended to any customer by the Act. This Office had advised lenders that transactions evidenced by these forms are subject to the Wisconsin Consumer Act.
While there may be situations in which a lender extending credit to a sole proprietorship may wish to utilize the rates permitted by Wis. Stat. s. 421.201 by placing the transaction under the Act, you should keep in mind the additional disclosure requirements, the limitations on delinquency charges, attorneys fees and balloon payments, as well as the additional requirements surrounding acceleration and recovery of collateral before using this form series in connection with a transaction which is not otherwise a consumer credit transaction. In view of these limitations you may prefer to use forms designed specifically for business purposes in connection with these loans.
Banking Letter 23, September 16, 1974, Commissioner Mildenberg