AFC supports the Small Business Disclosure Act of 2023, applauds sponsors Senator Bob Menendez and Representative Nydia Velazquez for introducing bicameral bill, and urges both houses to pass historic legislation  

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

Washington, D.C. (June 22, 2023) – The American Fintech Council (AFC), the premier industry association representing responsible fintech companies who deliver critical access to safe and affordable financial services, announces it proudly supports the Small Business Financing Disclosure Act of 2023 and urges immediate passage. The bicameral legislation, introduced last week by Senator Bob Menendez and Representative Nydia Velazquez, will create long needed transparency for 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. “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 recently introduced legislation aims to extend the same consumer lending guardrails and protections found in the Truth in Lending Acts to small business lenders. It would require important transparency for small business borrowers including annual percentage rate (APR) financing charges, and clearly identifiable loan terms and payment amounts.

“America’s over 33 million small businesses employ nearly half the private workforce and play a key role in the wellbeing of local communities,” said the congressional sponsors in their joint statement. “In recent years, online lending for entrepreneurs and small businesses has grown. While many of these financial products are fair and help meet entrepreneurs' capital needs, some carry enormous interest rates that can exceed 80% or even rise above triple digits without the rates being fully disclosed to borrowers.”

“Commonsense transparency standards promote innovation by enabling small businesses to comparison shop,” said Armen Meyer, Head of Public Policy at LendingClub, a personal and small business lender, and Chairman of the AFC Board of Directors’ Policy Committee. “This groundbreaking bill will create healthy competition, which enables lower prices for small businesses and supports responsible lending.”

The American Fintech Council joined the Responsible Business Lending Coalition (RBLC), the leading cross-sector small business financing coalition, who convened more 80 local, state, and national business organizations and stakeholders, to thank the sponsors and urged the House and Senate to pass the bill immediately.