The Small Business Administration ordered the banks in its network to halt the practice of debanking certain individuals and businesses and to submit reports to the agency on their compliance with President Donald Trump’s executive order on fair banking.
SBA Letter: Pursuant to Trump’s Aug. 7 executive order, the SBA sent a letter to more than 5,000 lenders ordering them to ensure they are not debanking politically disfavored people or businesses—either independently or at the direction of federal regulators—and to reinstate customers who were wrongfully denied access to financial services on the basis of political, religious, or ideological beliefs.
Required Actions: The SBA’s letter directs lenders to take the following actions by Dec. 5, 2025:
Identify any past or current formal or informal policies or practices that require, encourage, or otherwise influence their institution to engage in politicized or unlawful debanking as specified by the executive order.
Make reasonable efforts to identify and reinstate any previous clients denied service through a debanking action and send notice of the reinstatement to the injured party.
Identify all potential clients denied access to financial or payment processing services through a debanking action and provide notice to each advising of the denied access and the renewed option to engage in such services previously denied.
Reporting Requirement: The SBA directed lenders to submit a report by Jan. 5, 2026, addressing and evidencing compliance with these directives to debanking@sba.gov. It said lenders that fail to comply with these directives will lose their good standing with the SBA and will be subject to additional punitive measures.
More on Executive Order: The SBA letter responds to Trump’s “Guaranteeing Free and Fair Banking for All Americans” executive order, which also directs federal banking regulators to remove the use of reputation risk in their materials and to identify financial institutions that have had policies or practices that facilitate politicized or unlawful debanking and to take appropriate remedial action.
ICBA Advocacy on SBA Letter: ICBA is in contact with the SBA on the agency’s letter to seek clarity on banking industry compliance requirements and to minimize the reporting burden on community banks. ICBA is also urging the SBA to coordinate with the federal banking regulators in implementing the executive order.
ICBA View: In a national news release following the release of the executive order, ICBA distinguished community banks from larger institutions and said the community bank business model is rooted in local relationships and trust, not transaction volume or political motivations. ICBA strongly opposed “Operation Choke Point” initiatives under previous administrations, which aimed to discourage financial institutions from providing payments and deposit services to legal but politically disfavored industries.