Reno Targets Small Business Lending

In case you thought the heat was off of fair lending, you stand corrected. Attorney General Janet Reno has announced that lending bias persists in small business lending and the U.S. Department of Justice will take steps to crack down on any discrimination in small business lending.

Reno is responding to findings in studies that indicate that show that minorities are rejected more often than whites for small business loans, and that minorities that are approved may be approved for smaller loans than whites with similar credit histories.

The DOJ will apply what it has learned in the consumer lending field to small business lending. Given this concern on the part of DOJ, banks should look closely at underwriting practices for small business lending.

Copyright © 1998 Compliance Action. Originally appeared in Compliance Action, Vol. 3 , No. 5 & 6, 4/98