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Case Study

Learn how Zions Bancorporation, N.A. championed economic inclusion by increasing access to credit for women, minority, veteran and LGBTQ-owned small businesses.

During the summer of 2022, Zions Bancorporation, N.A., celebrated the one-year anniversary of its Small Business Diversity Banking Program (SBDBP). Structured under the Special Purpose Credit Program provisions of the Equal Credit Opportunity Act (ECOA), the SBDBP champions economic inclusion by increasing access to traditional credit for women-, minority-, veteran- and LGBTQ-owned small businesses with gross annual revenues of up to $10 million. Launched in markets across the bank’s footprint in May 2021, the program is offered to eligible small businesses across nine states through the bank's affiliates Amegy Bank of Texas, California Bank & Trust, National Bank of Arizona, Nevada State Bank, Vectra Bank Colorado (including New Mexico), and Zions Bank (Idaho, Utah, and Wyoming). 

Under the program, eligible small businesses can qualify for loans or lines of credit under expanded credit policy and terms that match those of conventional small business loans. Since the program’s launch, 1,049 applications have been approved for loans totaling more than $305 million. Approximately 8% of these loans would not have been approved without employing the SBDBP’s expanded credit policies.

Program Development

The work to create the Small Business Diversity Banking Program began during the summer of 2020. From its outset, the Program’s guiding principle was inspired by the overarching objective of the Office of the Comptroller of the Currency's Project REACH, specifically, to reduce inherent and structural obstacles so underserved populations have the same opportunities to succeed and participate in the nation’s financial system as others.” As the program project advanced, the bank aligned its development efforts with the guidance provided by Consumer Financial Protection Bureau (CFPB) advisory letter of December 21, 2020.

When drafting the required written plan for its SBDBP, Zions drew on research showing that disparities in access to traditional loans for underserved businesses existed well before the COVID-19 pandemic. While ECOA prohibited banks from using racially identifying information in credit decisions, ECOA’s Special Purpose Credit Program (SPCP) provisions authorized lenders to consider such data in order to extend credit to classes of persons who would otherwise be denied credit or would receive it on less favorable terms. Unfortunately, for more than half a century, traditional lenders have underutilized SPCPs to reach underserved small business communities.

Program development research also showed that women-, minority-, veteran- and LGBTQ-owned businesses are not only less likely to apply for credit than their non-minority-owned counterparts, but also that when they do apply, they are more likely to be declined or to receive credit with less favorable terms than non-minority-owned companies. To increase the availability of credit to eligible businesses, Zions expanded its underwriting policy on small business term loans and lines of credit by modifying select credit attributes/parameters that could result in greater approvals for the SBPBP cohorts. Applicants that self-certify their ownership eligibility on credit applications up to $1 million have access to these expanded credit criteria if they need them. The products, interest rates and fees offered under the program are the same as those offered to all business banking customers. The program enhances its support for targeted businesses by offering financial education resources.

Zions presented the program’s written plan to OCC and CFPB on Jan. 21, 2021. Neither agency objected to the plan. Zions’ credit administration department approved the program’s expansion of traditional credit policy in February 2021. The expanded policy, coupled with a waterfall process, ensures that self-certified business applicants are considered for all the bank’s existing products.

In less than 12 months of work, the Zions Bancorporation Access to Capital Taskforce created more than 200 unique business processes across multiple business offices to implement the program’s strategy for expanding credit access for underserved businesses. These processes now include initiatives to provide financial education to small business borrowers and collaboration with business support organizations to identify and reach underserved businesses.  

Among Zions’ guiding principles are: making clients stronger by creating economic opportunity for them; providing products and services that strengthen customers; and offering creative financing solutions to challenging community needs. The new SBDBP makes these guiding principles reality by opening new pathways to financial services—and with them new growth opportunities—for minority-, women-, veteran- and LGBTQ- owned businesses.

Podcast: Designing and Launching a Special-Purpose Credit Program

Amegy Bank EVP Jevaughn Sterling talks about Zions Bancorporation’s Small Business Diversity Banking Program, organized as a Special-Purpose Credit Program.

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