Small Business Administration Takes Action Against Discriminatory Practices

The Small Business Administration’s Advisory Office has reached out to lenders, outlining necessary steps that must be completed by December 5, 2025.

According to a recent executive order, federal bank regulators will need to remove any mention of “reputational risk” from their training and evaluation materials. Additionally, the SBA is pressing financial institutions to attempt to reactivate services for clients who were previously denied based on discriminatory policies.

President Donald Trump commented on this situation during a CNBC interview, stating, “The banks discriminated against me very seriously. They are totally discriminating. I’m thinking more and more about me, but they discriminate against a lot of conservatives.”

The SBA’s letter mandates that bank regulators must look into complaints and supervision data regarding illegal discriminatory practices, and it urges these regulators to refer such cases to the Attorney General. They are also directed to assess the past or current policies of financial institutions that may promote political discrimination.

Highlighted in the letter is the assertion that numerous groups have been unjustly targeted under the pretense of “reputation risk.” It also mentions that even Trump and his family encountered significant barriers as some banks declined to accept his deposits or even closed his accounts altogether.

The correspondence from the SBA clearly states, “Such discrimination against American individuals and organizations will not be tolerated.” It reinforces the commitment outlined in the Fair Banks executive order to ensure that institutions involved in government loan programs do not target clients unfairly based on their political, religious, or ideological views.

The letter details four specific actions that lenders must undertake by the deadline:

• Identify any previous or active policies that encourage politicization or illegal removal of services.
• Make reasonable efforts to reach out to past clients.
• Identify potential clients who were wrongfully denied access to financial services due to political grounds.
• Identify potential clients who were rejected for payment processing services following similar discriminatory practices.

The letter concludes with a request for evidence of compliance, asking for a report that explains how adherence was managed between December 5 and 30.