AFC supports the Small Business Commercial Financing Truth in Lending Act; applauds sponsors Senator Benjamin Kramer and Delegate David Fraser-Hidalgo

Legislation requires small business lenders provide clear and honest information including annual percentage rate, financing charges, loans terms and payment amounts

Annapolis, MD (February 26, 2024) – The American Fintech Council (AFC), the premier industry association representing responsible fintech companies and innovative banks announced its support for the Maryland Commercial Financing – Small Business Truth in Lending ACT. The legislation, introduced by Senator Benjamin Kramer and Delegate David Fraser-Hidalgo, will create long needed transparency for Maryland small business borrowers and establish critical rules for small business lenders.

“Small businesses deserve the clarity that enables them to make informed decisions about the financial options available to help their business thrive and grow,” said Phil Goldfeder, Chief Executive Offer of the American Fintech Council. “Commonsense transparency standards promote innovation. We applaud the sponsors of this bill for their commitment to protecting small businesses looking for the capital they need to help them realize their dreams.”

The legislation aims to extend the same consumer lending guardrails and protections found in the Truth in Lending Acts to more than 615,000 small business lenders across Maryland. It would require important transparency for small business borrowers including annual percentage rate (APR) financing charges, and clearly identifiable loan terms and payment amounts.

“Business owners have come to expect standard information for financing products, including APR, since this information has been required for consumer products for more than 50 years under the federal Truth in Lending Act,” wrote the Responsible Business Lending Coalition in a recent letter to the MD House Economic Matters Committee. “Research from the Federal Reserve suggests that in the absence of required disclosures, business owners often confuse commonly used terms such as “simple interest” and “factor rate” with an APR and mistakenly select costlier products based on this information.”

The American Fintech Council joined the Responsible Business Lending Coalition (RBLC), the leading cross-sector small business financing coalition, who convened more than two dozen local, state, and national business organizations and stakeholders, to support the legislation and urge immediate passage.