Equal Credit Opportunity Act
Obtaining credit can be a difficult process for any business
owner and especially for first-time borrowers. But keep in mind
that different lenders have different standards; if you did not
meet the standards of a particular restitution, you may still
qualify elsewhere. If you have a full understanding of why the
initial lender didn't approve your application, with time and more
attention to these areas, you can improve your proposal as a
result and may succeed the next time you apply.
Women and minority applicants may be concerned that they have
received less favorable treatment which is unrelated to their
creditworthiness. All business applicants have certain protections
against unlawful discrimination under the Equal Credit Opportunity
Act. The Act makes it illegal for lenders to deny your loan
application, discourage you from applying for a loan, or give you
less favorable terms than another applicant because you are a
woman or a minority group member.
Under the law, a lender may not take factors such as sex, race,
national origin, or marital status into account.
In addition, the lender may not ask for information about your
spouse unless your spouse has some connection to the business, or
unless you are relying on your spouse's income to support your
credit application or relying on alimony, child support, or
separate maintenance payments to establish creditworthiness. But
the lender may ask you for information about your spouse if you
are living in, or you are relying for security on property located
in, a community property state (Arizona, California, Idaho,
Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin).
Whether your business is large or small, if you are not granted
the credit, be sure to discuss any questions you may have with the
lender.
If You Need Help
If you are not granted credit by the lender and you believe the
lender may have acted unlawfully, you can seek further assistance
from the regulatory agency that supervises the institution. A list
of some of the agencies is contained in this brochure for your
reference. If it becomes necessary to seek legal assistance, the
Act provides some remedies. If you have been denied credit because
of unlawful discrimination and are able to prove it, courts may
award actual damages and in some circumstances may impose punitive
damages against the lender. If a lawsuit alleging discrimination
is successful, the court also may award court costs and attorney
fees.
Federal Enforcement Agencies
All creditors are subject to the Equal Credit Opportunity Act (ECOA)
and Regulation B (issued by the Federal Reserve Board), which
contains specific rules governing credit transactions. The
following is a list of the federal agencies that enforce the ECOA
and Regulation B for particular classes of financial institutions.
Any questions concerning a particular financial institution should
be directed to its enforcement agency.
State Member Banks of the Federal Reserve System
Division of Consumer and Community Affairs
Board of Governors of the Federal Reserve System
20th & Constitution Avenue, NW
Washington, D.C. 20551
(202) 452-3946
Non-Member Federally Insured Banks
Office of Consumer Affairs
Federal Deposit Insurance Corporation
550 Seventeenth Street, NW
Washington, D.C. 20429
(800) 424-5488
(202) 898-3536
National Banks
Compliance Management
Office of the Comptroller of the Currency
250 E Street, SW
Washington, D.C. 20219
(202) 874-4428
Federal Savings Association
Consumer Programs Division
Office of Thrift Supervision
1700 G Street, NW, Fifth Floor
Washington, D.C. 20552
(202) 906-6237
Small Business Investment Companies
U.S. Small Business Administration
409 Third Street, SW
Washington, D.C. 20416
(202) 205-6751
Federal Credit Unions
Office of Consumer Programs
National Credit Union Administration
1776 G Street, NW
Washington, D.C. 20456
(202) 682-9640
Finance Companies and Other Creditors Not Listed Above
Division of Credit Practices
Bureau of Consumer Protection
Federal Trade Commission
Washington, D.C. 20580
(202) 326-3224
Alternative Sources of Capital
The U.S. Small Business Administration (SBA), the federal
agency created specifically to assist and counsel small
businesses, suggests the following sources of capital in addition
to banks:
Friends, Relatives, Individuals
Savings and Loan Associations Insurance Companies
Finance Companies
Mortgage Companies
Small Business Investment Companies
Venture Capital Firms
State Government Financing Sources
Pension Funds
Government Agencies (such as SBA)
Private Foundations |
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