Responsible Lending Coalition Calls for Federal Action to Improve Equity in Small Business Lending
For immediate release: December 14, 2020
CONTACT:
Caitlin McShane
(415) 225-8855 | [email protected]
The Responsible Business Lending Coalition released a letter today calling for the Consumer Financial Protection Bureau to increase reporting on all financial products; robust data collection will help address longstanding inequities that disproportionately affect women and people of color.
Washington, D.C.--In response to the Consumer Financial Protection Bureau’s (CFPB) invitation for public comments on its Section 1071 Outline of Proposals, the Responsible Business Lending Coalition -- a national network of lenders, investors and small business advocates that share serious concerns about the rise of irresponsible small business lending -- released a letter today calling for a complete, robust implementation of the nation’s first small business data collection framework.
Of particular importance, we are calling on the CFPB to collect data on all commercial financing products, including merchant cash advances (MCA) and factoring. The CFPB’s current proposals suggest a dangerous carveout for MCA and factoring providers, despite Federal Reserve research indicating borrowers of color are more likely to use these “higher-cost and less transparent” products.
The CFPB must also require price reporting in the form of annual percentage rates (APR). Collecting pricing data will enable policymakers to receive a complete picture of the state of small business access to capital -- allowing them to identify inequities or potential patterns of discrimination. Measuring pricing is critical because it is the only metric that standardizes cost across products with differing term lengths, rates, and fees.
Section 1071 of the Dodd-Frank Act requires the CFPB to collect certain data on applications for credit for women-owned, minority-owned, and small businesses, and it has taken 10 years for the agency to begin the process of writing these regulations -- leaving small business owners vulnerable to violations of fair lending laws. The CFPB is only now beginning the process of writing these regulations following a 2019 lawsuit.
The CFPB was created nearly 10 years ago in response to the last recession. Now, during yet another generation-defining crisis that is disproportionately hurting small businesses owned by women, immigrants and people of color, it is critical that the agency execute its mandate to enforce fairness in lending. The CFPB must quickly and effectively implement robust small business data collection to help ensure an equitable economic recovery.
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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 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, 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 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, Opportunity Fund, Small Business Majority, StreetShares, and the Aspen Institute. For more information, visit www.borrowersbillofrights.org
