On August 26, the U.S. Small Business Administration (SBA) announced that it sent a letter to over 5,000 lenders with instructions to end “politicized and unlawful banking practices,” stating that lenders who fail to comply may be subject to “punitive measures.” Specifically, the letter instructs lenders to cease debanking customers based on political, religious or ideological beliefs and to reinstate clients “who were wrongfully denied financial services.” The letter was issued pursuant to Executive Order 14331, and requires lenders to, among other things: (1) identify any past or current policies that “require, encourage, or otherwise influence … politicized or unlawful debanking”; (2) make reasonable efforts to identify and reinstate previous clients that may have been denied services due to such policies; and (3) identify potential clients that were denied access to financial services or payment processing services due to such policies. Lenders must submit a report to the SBA addressing compliance by January 5, 2026.
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