General Electric is quietly cutting off lending to gun shops, as the company rethinks its relationship to firearms amid the fallout from the school shooting in Newtown, Conn.

This month, Glenn Duncan, owner of Duncan's Outdoor Store in Bay City, Mich., said he received a letter from GE Capital Retail Bank in which the lender said it had made "the difficult decision" to stop providing financing services to his store. Other gun dealers have received similar notices.

Rex McClanahan, co-owner of Buds Gun Shop in Lexington, Ky., remembered first meeting GE representatives at an outdoor trade show called Nation's Best Sports in Fort Worth, Texas.

GE is at least the second big financial firm to retreat from the gun business following the school shootings, which claimed the lives of 20 first-graders and six adults in December.

Days after the killings, private-equity firm Cerberus Capital Management LP said it would try to sell the gun company it owns—Freedom Group Inc.— which makes brands including Remington, Bushmaster, Marlin and H&R.

The moves highlight how companies, closely attuned to the concerns of investors and employees, have reacted to public horror caused by the attacks, even as complicated political considerations doomed new gun-control legislation in the Congress.

Since the American Revolution, when colonists went to war against Great Britain, the right to bear arms has been central to—and controversial in—American culture.

GE is based in Fairfield, Conn., and many of the GE's employees live around Newtown, and several have children in the Sandy Hook elementary school, where the shootings took place. Peter Lanza, the father of Sandy Hook gunman Adam Lanza, is an executive at GE Capital. GE Chief Executive Jeff Immelt held a town hall meeting with affected employees after the shooting, and the board has been updated on efforts to help staff, a person familiar with the matter said.

"Industry changes, new legislation and tragic events" led GE Capital to reexamine its policies on financing firearms, spokesman Russell Wilkerson said.

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