Equal Credit The privilege of buying goods, services or borrowing money in return for a promise of future payment. Opportunity Act

Federal statutes enacted to govern consumer transactions have recently been extended to commercial (business) credit transactions. The Equal Credit Opportunity Act (ECOA) is a federal statute A law passed by the legislative body of the state. prohibits credit grantors from discriminating on the basis of race, color, religion, national origin, gender, marital status, or age (collectively referred to as the "prohibited basis"). The statute also requires creditors to comply with certain notifications and retain records.

Under ECOA, a credit grantor must provide notice to the applicant The party (generally buyer/importer) for whose account a letter of credit is established. letter of credit A financing instrument issued by a bank in favor of an exporter that substitutes the bank's creditworthiness for that of the importer. is established. letter of credi A financing instrument A right to the payment of money such as agency notes, commercial pape The unsecured promissory notes of large, financially sound corporations. r, T-Bills, certificates of deposit (CD's), banker's acceptances and repurchase agreements. issued by a bank in favor of an exporter The person or company that sells or arranges to transport goods out of a country. that substitutes the bank's creditworthiness for that of the importer. t is established. of action taken with the request for credit within 30 days after a completed application (See Credit Application.) is received by the credit grantor. The applicant has 60 days from receipt of the credit grantor's "adverse action" letter to request an explanation of adverse ruling.

If an applicant requests an explanation of adverse ruling within 60 days, the credit grantor is to provide a statement of reasons within 30 days. The credit executive is not required to provide specific reasons for the adverse action, but instead may provide language such as "adverse credit history," "lack of business experience," "lack of working capital The net assets of an individual enterprise, partnershi A partnership is defined as “an association of two or more persons to carry on as co–owners of a business for profit.” While no particular form of contract is necessary to create a partnership, a partnership contract usually provides what the partners’ ri p, corporatio A corporation may be defined as a voluntary association of persons who are organized under state or federal law and recognized by the law as having a corporate name, and being entirely separate and distinct from the people who own it; having continuous li n, including not only the original investment, but the gains and profits from the business. ," or "too much secured debt."

The ECOA does not require a credit grantor to require a spouse to sign a personal guaranty A contract by which a guarantor assumes liability for the debts or obligations of another in the event of a default. guarantor A person who assumes liability for (guarantees) the debts or obligations of another in the event of a default. assumes liability for the debts or obligations of another in the event of a default. guaranto A person who assumes liability for (guarantees) the debts or obligations of another in the event of a default. r assumes liability for the debts or obligations of another in the event of a default. if that spouse is not directly involved with the applicant.

Credit grantors, under ECOA, must retain records for applicants denied credit. The period of time that the records must be retained depends on the amount of the gross revenues of the applicant.

(Source: Scott Blakeley, a principal Party entrusting a draft and/or documents to a bank for collection of payment, generally the seller of goods. draft A negotiable instrument that calls for payment of money. The drawer (or seller) orders in writing for the drawee (or buyer) to pay a specific amount of money to the drawer on a certain date. Also called a bill of exchange. and/or documents to a bank for collection of payment, generally the seller of goods. draf A negotiable Quality belonging to a document to transfer ownership of money, goods, or other items of value specified in the document by endorsement and/or delivery of the document. endorsemen Writing one's name upon paper for the purpose of transferring the title The exclusive rights, powers, privileges and immunities to property, real and personal, tangible and intangible. . t and/or delivery of the document. instrument that calls for payment of money A medium of exchange; coined or stamped currency. . The drawer The person, company, or bank that creates the draft and receives payment. (or seller) orders in writing for the drawee The person, company, or bank upon which a draft is drawn. (or buyer) to pay a specific amount of money to the drawer on a certain date. Also called a bill of exchange (See Draft.) . t and/or documents to a bank for collection of payment, generally the seller of goods. of Blakeley & Blakeley, LLP of Southern California, practices creditors' rights and bankruptcy (See Insolvency.) Insolvency Under the Balance Sheet definition of insolvent in the U.S. Bankruptcy Code, a debtor is insolvent when the value of a debtor's assets is exceeded by the debtor's liabilities. .) Insolvenc Under the Balance Sheet A financial statement listing the assets, liabilities and owner’s equity of a business entity as of a specific date. definition of insolvent in the U.S. Bankruptcy Code, a debtor or business entity that owes money. is insolvent when the value of a debtor's assets is exceeded by the debtor's liabilities. y.) law.)