General Electric's finance arm is cutting ties with gun dealers, halting financing offers at about 75 gun shops across the U.S. in the wake of the Newtown, Conn., massacre that took the lives of 20 schoolchildren and six teachers and administrators.
The December school shooting ignited a national debate about gun laws and drove some companies to distance themselves from the gun industry. Private equity firm Cerberus Capital Management announced a few days after the shooting that it would sell its controlling stake in Freedom Group International, the maker of Bushmaster rifles like the one used in Newtown.
General Electric Co.'s headquarters is in Fairfield County, Conn., about 20 miles from Newtown. Earlier this month, Connecticut Governor Dannel Malloy signed a wide-ranging bill that includes new restrictions on weapons and large-capacity ammunition magazines.
GE Capital started a "rigorous audit process" of its 200,000 customers due to "industry changes, new legislation and tragic events," spokesman Russell Wilkerson said in an e-mailed statement Thursday. GE Capital had originally cut ties with gun stores in 2008, but through the audit discovered less than 75 stores were still receiving financing packages because the store's business model had changed since then or it was grandfathered in.
One of those stores was Duncan's Outdoor Shop in Bay City, Mich.
Owner Glenn Duncan said that he received a letter in the mail in early April that said the store wouldn't be able to offer GE Capital loans to its customers. "I was really surprised," Duncan said in a phone interview Thursday.
The shop had been offering GE Capital loans to its customers for about three years. They'd use the six-month financing to buy pricier items, such as $2,000 safes used to store firearms, said Duncan. Others used the loans to buy add-ons for their gun purchase, such as a $300 scope that helps the shooter see far distances. Customers chose the loans because they have lower interest rates than credit cards, Duncan said.
About 5 percent of the shop's customers used the loans, Duncan said, "and it was starting to grow." He expected loan use to rise this month because tax refunds were delayed. He assumed more people would take out a loan instead and pay it back when the refund arrived. Now, he's stuck trying to find another lender to fill the gap.
GE Capital said the change in its policy won't hurt have a material effect on sales. The change doesn't affect financing of guns purchased at stores like Wal-Mart, which sell more than just weapons.
Changes in GE Capital's lending policy were first reported on Wednesday by The Wall Street Journal.