We do not see any problem with establishing a minimum loan amount under Illinois law; in fact, the Illinois Interest Act prohibits you from taking a security interest in real property for a revolving loan (for example, a HELOC) of $5,000 or less. 815 ILCS 205/4.1 (Though we note that the Illinois Financial Services Development Act allows financial institutions to offer revolving credit plans and to “take real and personal property as security therefore,” and it applies “notwithstanding the provisions of any other laws in connection with revolving credit plans.” 205 ILCS 675/4).

However, if you do not take proper precautions, regulators may view such a policy or practice as violating the Equal Credit Opportunity Act (ECOA). FFIEC’s Interagency Fair Lending Procedures use a minimum loan requirement as an example of a policy that could result in a “disparate impact”: 

Example: A lender’s policy is not to extend loans for single family residences for less than $60,000.00. This policy has been in effect for ten years. This minimum loan amount policy is shown to disproportionately exclude potential minority applicants from consideration because of their income levels or the value of the houses in the areas in which they live. 

FFIEC Interagency Fair Lending Procedures, p. iv. A policy that results in a disparate impact must be justified by a “business necessity,” and relevant factors can include “cost and profitability.” The business necessity must not be merely “hypothetical or speculative.” And, even if you can establish a business necessity for the minimum loan amount policy, if an “alternative policy or practice could serve the same purpose with less discriminatory effect,” you may still have an ECOA violation.