The American Fintech Council (AFC) expresses full support for the Small Business Financing Disclosure Act of 2023, which aims to establish transparency and regulation in small business financing.
New legislation that will establish transparency and regulation in small business financing has the full support of the American Fintech Council (AFC), an industry body that represents responsible fintech companies.
The Small Business Financing Disclosure Act of 2023 has been introduced by Senator Bob Menendez and Representative Nydia Velazquez, who have received praise from the council. It has also called for the bicameral law to be passed quickly in both houses of Congress.
By establishing openness and important guidelines for small business lenders, the legislation intends to give small business borrowers the power to make wise financial decisions. Its goal is to safeguard small business borrowers against predatory lenders and financing choices for the sector that have unjust terms and circumstances.
The AFC’s CEO, Phil Goldfeder, has endorsed the need for clarity to help small businesses make decisions that promote growth and success.
“We commend the bill’s sponsors for their dedication to safeguarding small businesses seeking the funding they require to realize their potential.”
The recently announced law aims to give small business lenders access to the same level of consumer lending safeguards and protections contained in the Truth in Lending Acts. For small business borrowers, it also mandates critical transparency, including the publication of the annual percentage rate (APR), financing costs, and plainly visible loan conditions and payment amounts.
The congressional sponsors emphasized the importance of small businesses in the American economy by stating that they employ roughly half of the private workforce and are essential to local communities.
Additionally, they noted the expansion of online lending opportunities for startups and small enterprises. While many of these financial instruments are reasonable and advantageous, some have outrageous interest rates that are not fully disclosed to consumers. These rates frequently exceed 80% or even approach triple digits.
Transparency criteria, according to Armen Meyer, head of public policy at LendingClub and chairman of the AFC board’s policy committee, encourage innovation by letting small firms assess their choices.
“Simple transparency requirements encourage innovation by allowing small enterprises to compare prices. With the help of this ground-breaking legislation, small businesses will be able to afford lower prices, and prudent lending will be supported.
Finally the Responsible company Lending alliance (RBLC), a cross-sector alliance supporting small company finance, has teamed up with the American Fintech Council. Together, they have gathered more than 80 business organizations and stakeholders from the local, state, and federal levels to thank the bill’s supporters and encourage its approval in the House and Senate.