California’s Credit Unions and Nevada’s Credit Unions have been made aware that the U.S. Small Business Administration (SBA) has sent a letter to its network of over 5,000 lenders, including credit unions, with an urgent directive.

This letter references the August 7, 2025, Executive Order, “Guaranteeing Fair Banking for All Americans,” which requires financial institutions to review past practices and ensure they are not engaging in politicized or unlawful “debanking.”

Required Actions for Credit Unions Receiving the SBA Letter

Credit unions that received the SBA’s letter must take the following actions by the specified deadlines.

By December 5, 2025:

• Review and identify any past or current policies or practices that resulted in politicized or unlawful debanking.
• Reinstate prior clients who were wrongly denied services, and provide them with notification.
• Notify potential clients who were previously denied financial services unlawfully and offer renewed access.
• Notify potential clients who were previously denied payment processing unlawfully and offer renewed access.

By January 5, 2026: Submit a comprehensive compliance report to the SBA. This report must include:

• Your credit union’s methodology for reviewing policies and practices.
• Findings from the review, including the number of cases identified.
• Actions taken for reinstatement and client notification.
• Supporting documentation, as applicable.

Note: This report is essential to maintain your credit union’s good standing with the SBA and to avoid potential punitive measures.

Next Steps for Credit Unions

The California and Nevada leagues are working with America’s Credit Unions to gain further clarification and guidance from the SBA on this matter.

In the meantime, credit unions that receive the SBA letter should consider the following best practices as you begin to address this directive:

Establish Clear Internal Definitions and a Lookback Period — The SBA’s letter references “Obama- and Biden-era debanking” and “Operation Chokepoint,” which began under the Obama administration. This implies a broad lookback period but does not specify a start date. While the leagues continue to seek clarification from the SBA, credit unions should recognize the ambiguity, establish a reasonable and defensible timeframe, and clearly document their rationale.

Conduct a Thorough Policy and Practice Audit — Review all of your credit union’s policies and procedures related to account opening, loan underwriting, and service termination. Ensure that all account decisions—including opening, managing, or closing accounts—are based solely on objective, measurable factors. This includes credit scores, transaction histories, and specific indicators related to Bank Secrecy Act (BSA), Anti-Money Laundering (AML), and Counter-Financing of Terrorism (CFT) compliance. You must avoid any reference to a member’s political affiliations, religious beliefs, or vague “reputation” concerns.

Systematically Identify and Review Past Cases — Identify and review past cases:

• Previous clients whose accounts or services were terminated.
• Potential clients whose loan applications or other service requests were denied.

Use your internal data to filter for cases where the reason for the decision was vague, non-financial, or could be linked to the member’s political, religious, or ideological beliefs. A manual review of these flagged cases will be necessary to determine if the decision was truly a result of unlawful debanking.

Plan for Reinstatement and Notification — For any confirmed instances of “politicized or unlawful debanking,” the credit union must make “reasonable efforts” to remedy the situation.

• Previous clients: Send a formal notice offering to reinstate their services.
• Potential clients: Provide a notice advising them of their previously denied access and offering them the option to re-apply.

Document every communication attempt and the outcome of the offer.

Speak to Legal Counsel — Because the SBA’s requirements raise compliance, contractual, and legal questions, consult with your credit union’s legal counsel as needed.

Monitoring the Situation

The leagues will continue to monitor the situation and provide further guidance as it becomes available.

Credit unions can also view America’s Credit Unions’ Compliance Blog and discussion in their executive order tracker.