Responsible Business Lending Coalition Endorses Small Business Lending Disclosure and Broker Regulation Act
For immediate release: July 30, 2020
CONTACT:
Caitlin McShane
(415) 225-8855 | [email protected]
Statement on behalf of the Responsible Business Lending Coalition, a network of nonprofit and for-profit lenders, investors, and small business advocates, in support of the Small Business Lending Disclosure and Broker Regulation Act
The Responsible Business Lending Coalition (RBLC) -- the only cross-sector coalition whose members represent nonprofit and for-profit lenders, investors, and small business advocates -- proudly endorses the Small Business Lending Disclosure and Broker Regulation Act of 2020. We applaud Congresswoman Nydia Velázquez for her leadership introducing this legislation, which will bring common-sense transparency standards to small business financing in the United States.
We are concerned by the lack of transparency currently provided to small businesses seeking financing – a problem requiring urgent action, particularly in light of COVID-19. Businesses are desperately searching for financing to bridge losses in revenue due to the pandemic, cover immediate expenses, and avoid closure. We project this bill will bring over $3.8 billion in savings for nearly 800,000 small businesses annually, including hundreds of millions in savings for over 158,000 minority-owned small businesses.
Particularly during this time of crisis, choosing an unaffordable financial product could be the difference between success and failure for our businesses that are already closing at high rates due to COVID-19-induced business interruptions. In red states and blue, small businesses matter to the health of our economy. They are what make our communities vibrant. We encourage leaders in Congress to work together to pass this historic law, keeping in mind the interests of small business owners across the country.
CONTACT:
Caitlin McShane
(415) 225-8855 | [email protected]
Statement on behalf of the Responsible Business Lending Coalition, a network of nonprofit and for-profit lenders, investors, and small business advocates, in support of the Small Business Lending Disclosure and Broker Regulation Act
The Responsible Business Lending Coalition (RBLC) -- the only cross-sector coalition whose members represent nonprofit and for-profit lenders, investors, and small business advocates -- proudly endorses the Small Business Lending Disclosure and Broker Regulation Act of 2020. We applaud Congresswoman Nydia Velázquez for her leadership introducing this legislation, which will bring common-sense transparency standards to small business financing in the United States.
We are concerned by the lack of transparency currently provided to small businesses seeking financing – a problem requiring urgent action, particularly in light of COVID-19. Businesses are desperately searching for financing to bridge losses in revenue due to the pandemic, cover immediate expenses, and avoid closure. We project this bill will bring over $3.8 billion in savings for nearly 800,000 small businesses annually, including hundreds of millions in savings for over 158,000 minority-owned small businesses.
Particularly during this time of crisis, choosing an unaffordable financial product could be the difference between success and failure for our businesses that are already closing at high rates due to COVID-19-induced business interruptions. In red states and blue, small businesses matter to the health of our economy. They are what make our communities vibrant. We encourage leaders in Congress to work together to pass this historic law, keeping in mind the interests of small business owners across the country.
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Responsible Business Lending Coalition
The Responsible Business Lending Coalition (RBLC) is a network of nonprofit and for-profit lenders, 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 100 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, Opportunity Fund, Small Business Majority, StreetShares, and the Aspen Institute. For more information, visit www.borrowersbillofrights.org
The Responsible Business Lending Coalition (RBLC) is a network of nonprofit and for-profit lenders, 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 100 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, Opportunity Fund, Small Business Majority, StreetShares, and the Aspen Institute. For more information, visit www.borrowersbillofrights.org
RBLC Member Federal TILA Endorsement Quotes
Accion Opportunity Fund / Opportunity Fund
“2.2 million - 15% - of the nation’s small businesses are currently closed due to COVID19. Minority-owned businesses bore the brunt of the pain, with more than 26% of Black- and 19% of Latino-owned businesses closing. Without common-sense protections, unprincipled lenders will continue harming family-run businesses, especially those owned by minorities, in towns and communities across the nation. This bill is a much-needed approach to transparency, giving small business owners the opportunity to make informed decisions and protecting those who are often left underserved and vulnerable.” — Luz Urrutia, CEO of Accion Opportunity Fund and 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
Funding Circle
“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 this bill because it is in the best interests of small businesses and they need our support now more than ever.” — Ryan Metcalf, Head of Regulatory Affairs of Funding Circle U.S.
LendingClub
“Commonsense transparency standards promote innovation. This groundbreaking bill will create healthy competition, lowering prices for small businesses and encouraging responsible lending.” — Richard Neiman, Head of Public Policy at LendingClub and former New York State Superintendent of Banks
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. Now, as our nation grapples with one of the worst financial crises in history, we cannot allow small businesses 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 Chairwoman Velázquez for leading this charge in Congress and urge all Members to join her in providing America’s entrepreneurs with the financial transparency they rightly deserve.” — John Arensmeyer, Founder and CEO of Small Business Majority
“2.2 million - 15% - of the nation’s small businesses are currently closed due to COVID19. Minority-owned businesses bore the brunt of the pain, with more than 26% of Black- and 19% of Latino-owned businesses closing. Without common-sense protections, unprincipled lenders will continue harming family-run businesses, especially those owned by minorities, in towns and communities across the nation. This bill is a much-needed approach to transparency, giving small business owners the opportunity to make informed decisions and protecting those who are often left underserved and vulnerable.” — Luz Urrutia, CEO of Accion Opportunity Fund and 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
Funding Circle
“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 this bill because it is in the best interests of small businesses and they need our support now more than ever.” — Ryan Metcalf, Head of Regulatory Affairs of Funding Circle U.S.
LendingClub
“Commonsense transparency standards promote innovation. This groundbreaking bill will create healthy competition, lowering prices for small businesses and encouraging responsible lending.” — Richard Neiman, Head of Public Policy at LendingClub and former New York State Superintendent of Banks
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. Now, as our nation grapples with one of the worst financial crises in history, we cannot allow small businesses 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 Chairwoman Velázquez for leading this charge in Congress and urge all Members to join her in providing America’s entrepreneurs with the financial transparency they rightly deserve.” — John Arensmeyer, Founder and CEO of Small Business Majority
Additional Information
The federal Truth in Lending Act of 1968, which requires transparency in consumer finance, does not apply to small businesses. In this regulatory gap, research by Opportunity Fund finds some small businesses paying annual percentage rates (APRs) averaging 94%, and as high as 350%, without these rates ever being disclosed to the borrower. More troubling, the average payment charged to these small businesses was approximately double what they could afford. Research from the Federal Reserve has found small businesses are misguided by the lack of transparency in the market today, and that small business owners see APR as among the most helpful facts they could be provided.
This historic bill builds upon the first small business truth-in-lending legislation, passed in California in 2018 on an overwhelming bipartisan basis, and it also builds upon New York State Small Business Truth in Lending Act (A10118 / S5470), passed by the New York Legislature last week. Both laws are inspired by the Responsible Business Lending Coalition’s Small Business Borrowers’ Bill of Rights.
This historic bill builds upon the first small business truth-in-lending legislation, passed in California in 2018 on an overwhelming bipartisan basis, and it also builds upon New York State Small Business Truth in Lending Act (A10118 / S5470), passed by the New York Legislature last week. Both laws are inspired by the Responsible Business Lending Coalition’s Small Business Borrowers’ Bill of Rights.
