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Getting Business Credit: Fast Facts

This article was edited and reviewed by FindLaw Attorney Writers | Last reviewed March 26, 2008

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factsfor Consumers

Federal Trade Commission - October 1993


Getting Business Credit
fast facts

  • The Equal credit Opportunity Act (ECOA) prohibits creditors, including business creditors, from discriminating on the basis of certain factors unrelated to credit worthiness.

  • Among other things, credit cannot be denied on the basis of sex, marital status, race, age, national origin, or religion. This applies to you and the people you deal with.

  • If your application for business credit is rejected, you can find out why by making a written request for the reasons within 30 days after you are denied credit.

As a business owner, or a person planning to start a business, you may need to borrow money to get started or to help your business develop or expand. If so, you should know about a law that protects you against illegal discrimination in business credit.

The Equal Credit Opportunity Act (ECOA) prohibits creditors from discriminating on the basis of certain factors unrelated to creditworthiness. This law also permits you to find out why your application was denied and to sue creditors who discriminate illegally. Here is a summary of what the law provides:

* Credit cannot be denied on the basis of sex, marital status, race, age, national origin, or religion. This applies to you and to the people you deal with. For example, if you request a loan for a store in an ethnic or minority neighborhood, creditors cannot deny your application based on your race or the race of your customers.

* If your application for business credit is rejected, you can find out why by making a written request for the reasons within 30 days after you are denied credit. The creditor must give you the specific reasons in writing within 30 days after you ask. If you do not agree with the reasons, discuss your concerns with the lender. Complaints frequently can be resolved at this level.

* If your business is small (less than $1 million in gross revenues), the lender must keep records of your credit application for a year after telling you of the credit decision. If your business is larger, the lender must keep your records for only 60 days after a credit denial, and if you do not request reasons within 60 days, the creditor may destroy your records. However, if you request that records be kept longer, or ask for a written statement of the reasons for denial, the lender will maintain records relating to your application for one year. These records are important for any future legal action you may consider against a lender.

If you believe your rights have been violated, you may wish to seek legal advice. You have the right to sue a creditor who violates the ECOA. If your complaint is about a governmental lender, public utility company, small loan and finance company, travel and expense credit card company, or other non-bank creditor, you may also wish to file a complaint with the Federal Trade Commission.

You can file a complaint with the FTC by contacting the Consumer Response Center by phone: 202-FTC-HELP (382-4357); TDD: 202-326-2502; by mail: Consumer Response Center, Federal Trade Commission, Washington, DC 20580; or through the Internet, using the online complaint form. Although the Commission cannot resolve individual problems for consumers, it can act against a company if it sees a pattern of possible law violations.

The FTC publishes free brochures on many consumer issues. For a complete list of publications, write for Best Sellers, Consumer Response Center, Federal Trade Commission, Washington, D.C. 20580; or call (202) FTC-HELP (382-4357), TDD (202) 326-2502.

Your Opportunity to Comment
 The Small Business and Agriculture Regulatory Enforcement Ombudsman and 10 Regional Fairness Boards collect comments from small business about federal enforcement actions. Each year, the Ombudsman evaluates enforcement activities and rates each agency's responsiveness to small business. To comment on FTC actions, call 1-888-734-3247.

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