STATEMENT: Congress must vote on H.R. 6054, the Small Business Lending Disclosure Act of 2021
For immediate release: July 13, 2022
CONTACT:
Caitlin McShane
(415) 225-8855 | [email protected]
July 13, 2022 -- Statement by Joyce Klein, on behalf of the Responsible Business Lending Coalition, regarding the Small Business Subcommittee on Oversight, Investigations, and Regulations hybrid hearing, “Fintech and Transparency in Small Business Lending."
I was glad today’s hearing covered a wide array of topics, including the lack of transparent disclosure of financing rates, terms, and fees among small business lenders. I thank the subcommittee for their invitation to provide expert testimony, alongside fellow Responsible Small Business Lending Coalition (RBLC) member Sean Salas, CEO of Camino Financial.
The lack of price transparency in small business financing undermines price competition and stymies much-needed innovation that can reduce the cost of small business financing. Without transparent disclosures that enable small business owners to compare costs, lenders compete instead on the speed or ease of accessing the financing. As a result, we’ve seen fewer innovations aimed at reducing the cost of financing. If small business owners are paying higher costs for financing, this reduces their ability to reinvest in growth, compensate their workers and contribute to their local economies.
H.R. 6054, the Small Business Lending Disclosure Act of 2021, would enable small business owners to make more informed choices. Introduced by Representative Nydia Velázquez, H.R. 6054 requires commercial financing providers to disclose clear and comprehensive pricing information to borrowers.
By providing critical information—like annual percentage rate (APR), total fees, and prepayment penalties—small business owners across the nation can easily shop and compare financing offers. Greater transparency would also improve market efficiency and foster a more competitive landscape, thereby driving costs down and saving small business owners hundreds of millions annually.
We urge the U.S. House of Representatives to schedule a floor vote on H.R. 6054 and pass the bill swiftly.
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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, Camino Financial, Community Investment Management, Funding Circle, LendingClub, National Association for Latino Community Asset Builders, Opportunity Finance Network, Small Business Majority, and the Aspen Institute. For more information, visit www.borrowersbillofrights.org.
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, Camino Financial, Community Investment Management, Funding Circle, LendingClub, National Association for Latino Community Asset Builders, Opportunity Finance Network, Small Business Majority, and the Aspen Institute. For more information, visit www.borrowersbillofrights.org.
