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:
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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'.
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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.
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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.
Source: Federal Trade Commission
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