Introduction of Federal Small Business Lending Transparency Legislation
STATEMENT: Accion Opportunity Fund praises introduction of federal lending transparency bill and urges lawmakers to pass swiftly
Statement by Joshua Miller, Vice President of Policy and Research at Accion Opportunity Fund, the nation’s leading nonprofit small business lender, on introduction of the Small Business Lending Disclosure Act of 2023
FOR IMMEDIATE RELEASE
Janel Knight Trulear
San Jose, Calif., June 16, 2023 — I commend Rep. Nydia Velázquez and Sen. Bob Menendez for introducing legislation that will strengthen American small businesses by requiring transparent lending disclosures and extending consumer protections to small business borrowers.
The Small Business Lending Disclosure Act of 2023 will help entrepreneurs make informed financial decisions and promote free market competition among small business lenders. California and New York have already enacted similar laws, but a state-by-state approach does not suffice. Federal truth-in-lending legislation will ensure a consistent, transparent, and fair small business lending market across the nation.
Since the landmark Truth in Lending Act was passed in 1968, individual consumers have been guaranteed transparent disclosure of loan terms, fees, and Annual Percentage Rate (APR). But small business lenders are not required to disclose the same information, even though many small businesses make financial decisions with the exact same level of knowledge as the average consumer. As a result, Accion Opportunity Fund’s research found that entrepreneurs have been misled into accepting small business loans with APRs as high as 350%.
High cost loans and predatory lending are bad for the American economy. We are currently experiencing an entrepreneurship boom with a record 10.5 million new small businesses since 2021. Yet post COVID there is an $130 billion unmet annual gap for small business financing in this country, and lenders are currently tightening their credit requirements and raising interest rates—making access to capital even more constrained.
Federal lending transparency legislation will help small business owners find fairly priced loans, leaving them more money to invest in growth, compensate their workers, and contribute to local economies. It will particularly benefit underinvested entrepreneurs—such as women, immigrants, and people of color—who have the least access to transparent and affordable loans. These entrepreneurs are increasingly the face of small businesses in America, and our success depends on their ability to thrive.
I applaud House Financial Services Committee Ranking Member Maxine Waters, Senate Banking Committee Chairman Sherrod Brown, Senate Small Business and Entrepreneurship Committee Chairman Ben Cardin, and Senate Finance Committee Chairman Ron Wyden for co-sponsoring the Small Business Lending Disclosure Act of 2023. I urge their fellow congressional members to act swiftly to pass this legislation and uplift the small businesses driving growth and prosperity in our economy.
To request an interview with Joshua Miller, Vice President of Policy and Research at Accion Opportunity Fund please contact Janel Knight Trulear at email@example.com or 617-875-6581.
About Accion Opportunity Fund
Accion Opportunity Fund works to create an inclusive, healthy financial system that supports the nation’s small business owners by connecting entrepreneurs to affordable capital, educational resources, coaching, and networks. Through innovative partnerships and outreach strategies, we reach entrepreneurs of color, low-income entrepreneurs, and women, who often lack access to the financial services they need to build and grow their businesses. Accion Opportunity Fund Community Development is the lending arm of Accion Opportunity Fund, California Finance Lender license #6050609. Visit the organization at aofund.org to learn more about their business growth resources and funding opportunities.