A Guide to Business Credit for Women

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