SBA orders ‘its network of lenders to halt ‘debanking’

The Small Business Administration has ordered more than 5,000 lenders in its network to immediately end what it calls “politicized or unlawful banking practices,” following President Trump’s executive order requiring banks to end debanking.

SBA Administrator Kelly Loeffler framed the order as a reversal of policies under previous Democratic administrations, often dubbed Operation Chokepoint and Chokepoint 2.0, which conservatives argue aimed to cut off right-leaning organizations from banking access.

Lenders that do not comply could lose their SBA standing and facing punitive measures.

“Since the Obama Administration, financial institutions have — both independently and at the direction of federal regulators — weaponized the banking system against Americans who refused to bend the knee to a partisan ideology. Under the leadership of President Donald J. Trump, whose own family and businesses were debanked, those days are over,” said Loeffler, who was previously CEO of crypto software-as-a-service provider Bakkt.

“Any bank that retaliates against otherwise eligible customers on the basis of reputational, religious, ideological, or political beliefs will be held to account,” Loeffler continued. “The SBA is committed to protecting access to financial services for small businesses, and we are grateful to President Trump and other federal regulators for working together to end this wrongful practice.”

Under the new rules, lenders must flag any current or past policies that encouraged politically motivated withholding of services to certain companies, reinstate previously excluded customers and notify those who may have been denied services on political or ideological grounds.

The directive, which was released Tuesday, also covers payment processing services. Institutions have until Dec. 5, 2025, to implement these steps and must file compliance reports with the SBA by Jan. 5, 2026, to remain in good standing with the agency.

The push to stop “debanking” — the denial of financial services to a particular entity, often from controversial industries — gained momentum in Washington last year. Fueled by GOP outrage over an Obama-era policy that discouraged banks from working with disfavored industries like arms dealers, the second Trump administration’s financial regulators have moved to rein in bank supervisors’ oversight of which industries banks may serve, removing reputational risk as a factor in bank examinations.

However, skeptics of the debanking narrative argue banks have a variety of non-political reasons for being selective about who they do business with, including anti-money-laundering compliance.

The SBA argues that in addition to discouraging banks from doing business with right-leaning industries, the Biden administration pressured banks to engage with industries traditionally allied with left-leaning causes, like fighting climate change. The SBA touted its recent move to end the SBA’s Green Lender Initiative and other “partisan programs that funneled taxpayer dollars to pick winners and losers at the expense of qualified small business owners.”

Military credit union advocates praised the SBA’s order, saying it demonstrates that past policies of discouraging relationships between banks and certain industries will not be tolerated under the current administration.

“This decisive action sends an unmistakable message: in America, access to banking must be based on merit and law — not ideology,” said Anthony Hernandez, the President and CEO of the Defense Credit Union Council. “We applaud the President’s leadership in targeting unlawful and politicized ‘debanking’ practices that have no place in our financial system.”