The SBA ordered the banks in its network to halt the practice of debanking certain individuals and businesses and to submit reports on their compliance.
The Small Business Administration sent a letter to more than 5,000 lenders in its network with the aim of ordering them to ensure they are not debanking politically disfavored people or businesses. This includes either independently or at the direction of federal regulators, as well as to reinstate customers who were wrongfully denied access to financial services on the basis of political, religious, or ideological beliefs.
The letter comes pursuant to President Donald Trump’s executive order on fair banking, which also directs federal banking regulators to remove the leverage of reputation risk in their materials and to identify financial institutions that have had policies or practices that facilitate politicised or unlawful debanking and to take appropriate remedial action.
More information on SBA’s order
According to official press release, the required actions proposed by SBA’s letter include the process of identifying any past or current formal or informal policies or practices that require, encourage, or otherwise influence their institution to engage in politicised or unlawful debanking as specified by the executive order, make efforts to identify and reinstat and previous customers who were denied service through a debanking action and send notice of the reinstatement to the injured party, as well as identify all potential clients who were denied access to financial or payment processing solutions through a debanking action. In addition, lenders will be expected to provide notice to each advising of the denied access, as well as the renewed option to engage in such services previously denied.
The SBA directed lenders to submit a report by Jan. 5, 2026, as the institution mentioned that lenders that fail to comply with these directives will lose their good standing with the SBA and will be subject to additional punitive measures.
