Responsible Business Lending Coalition Commends Small Business Lending Disclosure Act of 2021
WASHINGTON, Nov. 18, 2021 /PRNewswire/ — The Responsible Business Lending Coalition (RBLC) — the leading cross-sector small business financing coalition — commends the introduction today of the Small Business Lending Disclosure Act of 2021. The Act will establish common-sense transparency standards in small business financing at a critical time of recovery for Main Street. The RBLC thanks House Small Business Committee Chairwoman Nydia Velázquez and Senator Bob Menendez for exemplifying true leadership and commitment to small businesses by sponsoring this bicameral legislation. We also applaud House Financial Services Committee Chairwoman Maxine Waters, House Subcommittee on Consumer Protection and Financial Institutions Chairman Ed Perlmutter, Senate Banking, Housing and Urban Affairs Committee Chairman Sherrod Brown, and Senate Small Business and Entrepreneurship Committee Chairman Ben Cardin for serving as lead cosponsors on the bill.
Today, the federal Truth in Lending Act ensures transparency in consumer lending but does not apply to small business financing. Without the transparent disclosure of the Annual Percentage Rate (APR) that we take for granted in loans for homes, cars, credit cards and personal lending, a range of confusing or misleading ways of disclosing the true cost of financing has emerged in small business credit markets. This lack of transparency can make it difficult or impossible for small business owners to compare their financing options effectively, and can conceal APRs as high as 358%. Selecting an unaffordable financial product could be the difference between success and failure for businesses re-emerging from COVID-19 and for entrepreneurs just starting out.
By enabling small business owners to identify which loan or advance may be affordable for them, and by bringing transparent price competition to small business financing, we project that the Small Business Lending Disclosure Act of 2021 will bring over $4.7 billion in savings for nearly one million small businesses annually, including hundreds of millions in savings for approximately 400,000 minority-owned small businesses—a substantial sum that can further propel our national economy towards full recovery.
The Responsible Business Lending Coalition, along with 20 local, state, and national business organizations and stakeholders, urges lawmakers from both sides of the aisle to pass this historic legislation in support of our small businesses, local communities, and our national economy.
RBLC Member Federal TILA Endorsement Quotes
Accion Opportunity Fund
“Entrepreneurs of color bore the brunt of COVID-19’s economic fallout, with more than 19% of Black-, 10% of Latinx-, and 10% of Asian-owned businesses closing permanently, and they will continue to face an uphill battle in the months ahead. This is a critical time for small businesses to start rebuilding, and accessing capital will be crucial in this effort. The Small Business Lending Disclosure Act of 2021 is much-needed to provide transparency, giving small business owners, especially entrepreneurs of color, a fair opportunity to make informed financial decisions for their businesses.” — Luz Urrutia, CEO of Accion Opportunity Fund
Community Investment Management
“Small businesses deserve common sense transparency in evaluating financing options so they can make well-informed financial decisions and play a key role in rebuilding our economy–and this bill delivers that. In the face of our current economic crisis, entrepreneurs desperate to keep their doors open are vulnerable to predatory lenders at the worst possible time. We all have a stake in the financial health of our small business community and should rally around national legislation to protect their basic rights to responsible and transparent financing.” — Jacob Haar, Managing Partner of Community Investment Management
“We believe a free and fair market operates most efficiently when there is transparency in pricing, terms and conditions. When a small business has all of the necessary information up front including the annual percentage rate (APR), they can comparison shop and make informed decisions that are best for their business. Funding Circle supports one national uniform small business financing disclosure law because it is in the best interests of small businesses and they need our support now more than ever.” — Ryan Metcalf, Head of U.S. Public Policy at Funding Circle U.S.
“Commonsense transparency standards promote innovation by enabling small businesses to comparison shop. This groundbreaking bill will create healthy competition, which enables lower prices for small businesses and supports responsible lending.” — Louis Caditz-Peck, Director of Public Policy at LendingClub
Opportunity Finance Network
“At a time when many small business owners need capital to stabilize their businesses, this legislation is critical to helping small businesses access affordable, responsible financing and avoid high-cost predatory loan products. Requiring lenders to disclose key information including the annual percentage rate (APR) ensures entrepreneurs have the knowledge they need to make financial decisions that grow and strengthen their business.” — Lisa Mensah, Opportunity Finance Network President and CEO
Small Business Majority
“Unregulated, predatory lenders come with the promise of fast cash for small businesses; however, these lenders often use bait and switch tactics that can send a business into financial ruin. For years predatory lenders have been able to skirt transparency and trick small business owners into repaying a loan at exorbitant rates—sometimes as high as 350% APR. As small businesses face a long road to recovery from COVID-19, we cannot allow them to be taken advantage of any longer. Having access to clear and accurate lending terms will be critical to aiding small business recovery in the months and years ahead. We commend Senator Menendez and Congresswoman Velázquez for leading this charge in Congress and urge all Members to join them in providing America’s entrepreneurs with the financial transparency they rightly deserve.” — John Arensmeyer, Founder and CEO of Small Business Majority
About the Responsible Business Lending Coalition
The Responsible Business Lending Coalition (RBLC) is the leading cross-sector voice on small business financial protection. The coalition includes nonprofit and for-profit CDFIs, fintechs, investors, and small business advocates that share a commitment to innovation in small business lending and serious concerns about the rise of irresponsible small business lending. The coalition created the Small Business Borrowers’ Bill of Rights, the first cross-sector consensus on the rights that small business owners deserve and what financing providers, brokers and lead generators can do to uphold those rights. Over 110 small business lenders, brokers and lead generators, and advocacy organizations have endorsed these standards. Members of the Responsible Business Lending Coalition include Accion Opportunity Fund, Community Investment Management, Funding Circle, LendingClub, Opportunity Finance Network, Small Business Majority, and the Aspen Institute. For more information, visit www.borrowersbillofrights.org.
Contact: Caitlin McShane
SOURCE Responsible Business Lending Coalition