Transcription
The landscape of business credit and SBA loans are about to change in real time. In this video, I want to break down President Donald Trump's newest executive order called the Fair Banking Executive Order. Now, this rule is meant to stop unfair treatment by banks and make sure that everyone has a fair chance at getting access to business credit.
Now, two quick disclaimer uh disclaimers. Number one is I don't want this video to be overly politicized and so I'm going to be as neutral as possible to just give you the facts and what we know about this new executive order. And then number two, like anything else, we're entrepreneurs. We're real estate investors. We are going to adapt and we are going to use whatever is thrown our way so that we can use it in our favor to get ahead, which is the whole purpose of this content and of this video so you can utilize this data to help get access to business credit so you can reinvest that capital back into your business and back into your operations.
So, with those two things out of the way, let's dive right into it. What is the uh what is debanking? This is when banks and financial institutions close your accounts and they refuse to let you open new accounts or they cut off their services even though you're running and this is going to be a key word here, a legal business. So, even if you have an illegal business or if you have a sketchy business, like this isn't going to apply to you, you have bigger problems to worry about. This is for legal business owners. And they usually do this and they when they make this decision they say that hey it's a risk for us to work with you and they consider that for non-financial reasons. This is what this is going to take an aim at stopping. It's not the same as you committing fraud or as you not paying your bills. The banking happens when the bank disagrees with your political views or your beliefs. The bank doesn't like your industry even if it's a legal one. And that's a little interesting because if you guys have seen any of my content before, then you know that on this channel we talk a lot about high-risk industries, restricted industries, low-risk industries. So how they're actually going to formulate what is considered a an industry that a bank should be taking on as a client is going to be something that I'm personally going to be keeping a close eye on because we do have clients that come to us across different industries. And then lastly is the bank that uh the bank thinks that serving you could hurt their image. This is known as reputation risk which is where this essentially entire bill started or this entire I should say bill desire executive order started.
Now the Fair Banking Executive Order key points I want to break down line by line or rather point by point so that way you have an overall understanding from a high level overview of what to expect how you can take advantage of these uh changes that are coming down the pike. And then also I'm going to link down in the comments the actual press release from the White House so that you can see for yourself what's in it. So this is a condensed version so that we can make it through this video in one safe piece.
Number one is banks can't refuse you because of your beliefs or your type of business even if it's a legal one. This is meant to protect both business owners and the companies from being denied for political or religious reasons. This applies to all big banks that are regulated by the government. Now again, a little caveat, a little little asterric that that I want to put there is how much do you actually want the government involved in regulation. Again, that's going to be a gray area that's between maybe you you let me know down in the comments. Hey, if it serves me in my business and I can actually get the capital that I need, by all means, let the big boys step in. If I don't want the government as involved, let me know down in the comments as well as, hey, I actually prefer the way that it's being ran right now with the banks and then how they actually treat the business owners and who they decide to work with or to not work with. And then this is also meant to make sure that all legal businesses have the same chances at the banking services. One more thing that I wanted to say about this right here that applies to all big banks. So this is going to be just about any bank that you can think of, all the big ones. I won't say their names on here just because I want this to be a more general statement. I don't want any financial institution thinking that, you know, we're coming for them here on this channel or in this video. So any bank that's regulated by the government, that's who this is going to apply for. So you can pretty much make an umbrella statement on that and say, "Hey, that's pretty much every single bank that's on there." And you would be correct.
Number two is the reputation risk excuse is going to be gone. This is what they are trying to abolish, which makes banks uh have to essentially decide whether or not they're going to work with you based off of real facts. So banks can't use vague or personal opinions just to say no. They must look at real numbers like your credit and your ability to pay back. Which is crazy because you would think that that's what it would be, but sometimes, especially when I'm working with a client when we're taking them on is they would say, "Erv, I've tried to apply for an SBA loan before. I've tried to apply for a business line of credit before. I've tried to get access to business capital, but I can't and I don't actually know why." And then when we start taking a look under the hood, we start auditing their business, we start to find out a couple different things that are wrong with the business. But more often than not, we just see that they do tend to get a lot of vague responses as to why they were denied. I wish that they would be more clear sometimes around it's because you're not making enough money in your business. It's because your personal credit is on the floor. It's because you have too many uh recent credit inquiries, too many capital uh to too many capital applications that you applied for. Sometimes you'll get that, but sometimes they just kind of group it in a bunch. And so if you want my opinion, this is me kind of stepping outside of frame. My opinion on this from a business owner owner perspective is I would want to know why I was denied so that I can go back in and fix that missing link and fix that piece so that I can then work on that and get access to business capital.
Now stepping back in this makes decisions more open and fair for industries that were often affected before. Now this included firearm makers. This was typically a restricted industry. Gaming and streaming is an interesting one because as far as I know there were specific games that I think it was either Visa or Mastercard or both where they were actually removing games off of certain platforms where you couldn't pay for it just because of some of those uh just because of maybe the way that some of the games were portrayed. And so this is actually meant to protect some of these gaming and streaming type of companies or individuals if that's maybe in your space. Payday lenders, cryptocurrency companies, and oil and fuel companies if you're involved in that.
One more word that I do have to say on crypto companies. Something that I'm keeping again a close eye on. Me stepping out of frame here just to kind of give you my thoughts is with cryptocurrency companies. I'm wondering if this is also going to include individuals who invested into crypto. I say this because we we've had clients that have worked with us where before they came to us, they were essentially blacklisted from some of these bigger banks simply because we're talking about 2021, 2022, early 2023, and even a little bit before, simply because they used their accounts to transfer money to buy crypto. So, it was something as simple as Ethereum or buying something as simple as Bitcoin, which you would think that those are mainstream cryptocurrencies, and they are at this point, but at the time, it was still a bit more taboo. So much so that some of these banks without any warning, without any fair shot, just closed the accounts, sent a check out with how much was in in those accounts and they said, "Hey, we're no longer going to be servicing you." It's funny because now those same banks have their own portals for you to invest in cryp or in crypto through them. And so I'm wondering if this is also going to help the everyday crypto investor or somebody who maybe got their account shut down just because get back into the banking ecosystem and get some of their accounts back. Something that I'm keeping an eye on to help out clients with.
Number three is the SBA will help people get accounts or credit back if they were unfairly dropped, which I think it's it's a it's a win-win if I'm being real with you because this is something that I'm going to be utilizing with our clients. The SBA will work with banks to reopen accounts for eligible people. they may reach out to businesses that were cut off before. So, if you applied for SBA, uh, maybe a 7A loan or a microloan, whatever it is, again, sometimes the language around why you got denied could be a little bit vague. So hopefully if they do reach out to you, whether it's by mail or maybe on the portal, they give you a reason why you were denied or why maybe the limit was so low and you can actually go in, which is something that I'm going to be working with our clients on, actually go in and fix the bottlenecks, whether it's from the structure of the business, maybe it's the business credit profile, maybe it's the owner's credit profile, the way that they were maybe portrayed during their credit check process, so that we can go back in and actually get access to some of these funding products. And then lastly, this gives business owners, at least it aims, to give business owners a chance at rebuilding banking relationships, which again, it's a win-win if they can actually uphold this.
Number four is banks will be checked for unfair treatment. So, it looks like they're going to be sending inspectors and auditors who are going to look at both past and present actions. Banks can be fined and face other penalties if they break these rules. And then this creates more of an oversight by the government, which again, let me know down in the comments if you actually want more oversight by the government on something like this, or if you're like, "Hey, I I kind of prefer the way that it is right now. Not too much government oversight. Just let the government do its thing. Let the bank do its thing, and we'll kind of play in between the lines."
Number five is cases about religious discrimination can go to the attorney general, which is a big step up from where it is now. Big cases can get viewed at the highest level. the law will be used to file a to file legal action or legal violations against banks if you can actually prove this is the big one. If you can actually prove that the reason why you were denied was because of your religious views. Now this is going to be a bit more vague and it's going to be again playing it between the lines. But let's say that you're a business owner and you post both personal content and business content on your page as an example. And let's say that on your story or on one of your posts you put a religious post that you were at a religious service or maybe at a con at a religious concert, whatever it is, and you can point back to, hey, I think the reason why I was denied for this business on credit wasn't because my business isn't producing revenue. It wasn't because my credit is low. It's because of when I posted that Sunday night that I was at this event or that Saturday night that I was in this group. They looked at that and then that's why I got denied for this business line of credit or for this SBA product. Again, this is going to be a bit more nuanced than what we're seeing right now, which is why I think this is going to be the first layer that we'll start to see roll out as we start to get more data from how this is actually being upheld. Again, the goal with this is to strengthen protections for religious freedom in banking.
And then lastly, number six is the Treasury Department. This is the part that I'm really keeping a close eye on outside of everything else. The Treasury Department has 6 months. So they gave him 180 days to create a long-term plan. This plan could include new laws or rules. It aims to fix any remaining gaps in the finan in in the banking fairness world. And then it aims to help to make sure that these protections last. So in English, what this means is that we could start to see a shift in real time between the next 90 to 180 days depending on how aggressively they start to when I say they, I mean the White House and and the government. they actually start start to press financial institutions on making changes with the way that they underwrite and how they expose or how they essentially give you information based off of their underwriting criteria.
Now, the pendulum can swing both ways here, right? This could make underwriting a bit more transparent, which I don't think it's ever a bad thing if we have more transparency, just full honesty, right? I would want more transparency of why again I was denied for something or why maybe the limit was so low compared to what I was expecting to get from the business on a credit or the business loan type of approval. And the other side of that is if maybe they get the government gets maybe a little bit too involved. How much hearsay or how much say do they actually have in the way that the bank creates their algorithm that determines whether or not a potential client is going to is going to work with them and is going to get access to some of their funding products.
So in closing, why this matters? This rule is meant to ensure that business owners have a fair and equal chance to get banking and credit without worried about being judged for their beliefs, their type of business. And then it also gives a way for people who were shut out before to get their accounts back and to potentially get access to credit, which again, it's a win-win regardless of who would have approved uh let's say this new rule or this new executive order. I always like to see it from the opportunistic standpoint of an entrepreneur and a business owner is how can I utilize this to put myself in a position to win. I just want to win and I want to see how the new rules work so that I can play the game in a smart way. And so if this video was helpful for you, I'm going to link down below the full press release so you can read it for yourself. But look, none of this actually matters if you don't have a business that's set up properly. If you don't have an actual funding framework that's suited for your business and if you don't know h how to set up your business in a way that's going to allow you to get access to business capital. I actually made a full video breaking that down right here. Check it out.