LendingClub is backing the Small Business Lending Disclosure Act, a bill introduced in the U.S. House and Senate this week that calls for extending the transparency standards of the federal Truth in Lending Act to small business financing.
“Small business owners deserve transparent disclosure of the price they would pay for a loan, plain and simple,” Louis Caditz-Peck, director of public policy at LendingClub, said in a press release emailed to PYMNTS.
Caditz-Peck pointed to the bill’s sponsors, Rep. Nydia M. Velázquez (D-New York) and Sen. Bob Menendez (D-New Jersey), as having supported small business owners, and pushed for a “more transparent, responsible and potentially innovative small business lending system.”
See also: LendingClub Loan Originations Up 14% Q/Q, Marketplace Revenues Gain 15%
The Truth in Lending Act was first established in 1968 and mandated price and term transparency for consumer loans, but didn’t apply the rules to most small business loans. Research conducted by Accion Opportunity Fund, a LendingClub partner, revealed that some small businesses were paying APRs as high as 358%, often without disclosure to the borrower.
“We’re looking forward to working on this bill with lawmakers on both sides of the aisle to help small businesses recover economically, and to encourage innovation in small business lending. LendingClub has shown that innovation can lower prices, but that only benefits small business customers if they are able to easily compare the prices they are being offered. Truth in Lending standards are not being upheld across the market today, and small businesses are literally paying the price,” said Caditz-Peck.
Read more: Credit Cards See Growth as Part of Global Business Payments Mix
The bill has the support of the Responsible Business Lending Coalition (RBLC), which LendingClub co-founded in 2015, along with the backing of the nonprofit Community Development Financial Institutions (CDFI), small business advocacy groups, and other for-profit FinTechs.
The Small Business Lending Disclosure Act was co-sponsored by House Financial Services Committee Chairwoman Rep. Maxine Waters (D-California), House Subcommittee on Consumer Protection and Financial Institutions Chairman Rep. Ed Perlmutter (D-Colorado), Senate Banking, Housing and Urban Affairs Committee Chairman Sen. Sherrod Brown (D-Ohio), and Senate Small Business and Entrepreneurship Committee Chairman Sen. Ben Cardin (D-Maryland).
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More