Congress considers bill to protect LGBTQ+-owned businesses from lending discrimination

A bill has been introduced in both the House and the Senate that would require financial institutions to collect data on LGBTQ+-owned businesses’ access to credit and capital, which would make it easier to find and address discrimination against those businesses.

Sens. Alex Padilla (D-CA) and Kirsten Gillibrand (D-NY) introduced the LGBTQI+ Business Equal Credit Enforcement and Investment Act in the Senate, and out Rep. Ritchie Torres (D-NY) introduced the bill in the House earlier this month.

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In a press release, Torres noted that “70% of the LGBTQI+ community remains unprotected by anti-discrimination laws” and that 7.7 million LGBTQ+ people live in places where there are no protections against anti-LGBTQ+ credit discrimination.

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“This legislation builds on a foundation laid by several statutes and regulations,” he said. “It would make credit more accessible, credit laws more enforceable, and creditors more accountable. It would represent a triumph of transparency in the service of economic opportunity for all, regardless of who you are and whom you love.”

“With anti-LGBTQ+ legislation and hate crimes on the rise, LGBTQ+ business owners continue to face persistent and unjust barriers to financial success,” Padilla said in a press release. “LGBTQ+-owned small businesses are a cornerstone of local economies, and they deserve equitable resources to help them grow and thrive.”

The bill amends the Equal Credit Opportunity Act, which already requires financial institutions to collect data about credit and capital access for women- and minority-owned businesses. It also amends the Dodd-Frank Wall Street Reform and Consumer Protection Act to require financial institutions to collect data about the self-described LGBTQ+ identities of business owners who they work with, along with data already collected about sex and race.

The bill addresses a real problem. According to the Center for LGBTQ Economic Advancement & Research (CLEAR) and the Movement Advancement Project, 46% of LGBTQ+-owned businesses reported that they didn’t get any of the financing they applied for in 2021, larger than the 35% of other businesses that reported the same. The financing included COVID-19 relief programs. They noted that LGBTQ+ business owners are often younger and own smaller businesses than their cisgender, straight counterparts.

Another part of the problem, though, is discrimination.

“If the lender discerns the applicants’ LGBTQ identity, they may choose to deny that loan or charge the applicant a higher cost for the credit they are approved for,” said CLEAR’s Spencer Watson. “This is particularly the case for highly visible members of the LGBTQ community — such as transgender or nonconforming gender presentations.”

The bill has been endorsed by the Congressional Equality Caucus, the Ali Forney Center, the Center for American Progress, Destination Tomorrow, Drag Out The Vote, the Human Rights Campaign (HRC), Immigration Equality Action Fund, InterAct, and New Pride Agenda.