We received a request for a business loan and the industry NAICS code has been determined to be RESTRICTED in our platform. This is a small business retailer of general merchandise (t-shirts, hats), however their business is all online and ‘Non-store Retailers’ is a RESTRICTED industry. For the decline reason, would something like "online business" or "non store retailer" be a valid reason?

A restricted business on your Platform? What in the world does that mean? What does the type of business have to do with a lending platform? I guess I am confused.

Tarhe is the platform your lending software (or something similar) or is this an internal decision your institution has made?

So if a business is online, there are no loans allowed? Many home based businesses would be eliminated. Depending on your criteria and its actual organizational structure, I suppose Amazon wouldn't qualify either. From a quick search:

"All Amazon Books, 4-star and Pop Up physical store locations are now closed. These closures do not impact other Amazon physical store locations such as Amazon Go, Amazon Fresh and Whole Foods Market."

Such a policy would seem quite limiting. I also found this:

Want to Know "What is the NAICS Code" For Online Stores and Ecommerce?"
The NAICS Codes for Online Stores, regardless of what they sell, is 454110. This code is one of the more difficult for online retailers and ecommerce sites to identify. The category name isn't entirely intuitive, which makes searching difficult.

It's important to emphasize that it is not important what you sell online. If you sell entirely online or by mail order, your NAICS code is 454110.

I suppose a better answer to your question is rooted in Randy's and SteveDave's responses - you must understand why it is restricted and what that really means as by itself that is an inadequate reason for denial, like "doesn't qualify."

Thank you for the helpful responses. For our business credit cards, we use a platform that has been set up (by the bank) with criteria to automatically approve or deny the request. Evidently, the NAICS code for online business is one of the factors that will cause a denial. I confirmed with our CCO that this is their intent for the business credit card product - not for other commercial loans.

I guess I am confused as to what the additional risk might be if you willing to make them a commercial loan but not issue them a credit card? You would have to look at the fair lending implications. i.e., consider the demographics of the owners of such businesses.

Thank you!