Getting Business Credit
Whether you're planning to start your own business or expand
the one you own, you may be in the market for credit. When you
shop for a loan or line of credit, remember that the law protects
you against discrimination. The Equal Credit Opportunity Act
(ECOA) prohibits creditors from denying you a loan based on
reasons that have nothing to do with your credit-worthiness.
The Federal Trade Commission wants you to know that:
- You cannot be denied business credit on the basis of your
race, color, religion, national origin, sex, marital
status, or age - or that of your customers. For example,
if you request a loan to open a store, a creditor can't
deny your application based on your race or your
customers'.
- If your application for business credit is rejected, you
can find out why. You must submit a written request for
the reasons within 60 days of the denial. The creditor
must give you the specific reasons - in writing - within
30 days of your request. If you don't agree with the
reasons, consider discussing your concerns with the
lender; you may be able to resolve the issues.
- If your business is small (less than $1 million in gross
revenues), the lender must keep records of your credit
application for one year after telling you of the credit
decision. If your business grosses more than $1 million,
the lender has to keep your records on file for only 60
days after denying you credit. If you ask that your
records be kept longer, however, or if you ask for a
written statement of the reasons for denial, the lender
must keep your file for a year. If you don't ask about
the reasons for denial within 60 days, the law permits
the creditor to destroy your records. Note that these
records could be important for any legal action you may
consider against a lender.
You have the right to sue a creditor who doesn't comply with
the law. If you have a complaint about a government lender,
public utility company, small loan and finance company, travel
and expense credit card company, or other non-bank creditor, you
may want to file a complaint with the FTC.
