On July 13, the House Committee on Small Business Subcommittee on Oversight, Investigations, and Regulations held a hearing entitled, “Fintech and Transparency in Small Business Lending.” Hearing witnesses included CEO and Co-founder of Camino Financial Sean Salas; Chair of the Responsible Business Lending Coalition (RBLC) and Senior Director of Business Ownership Initiative at the Aspen Institute Joyce Klein; and Regional Director of Twin Cities Small Business Development Center Diane Paterson.
During their testimonies, witnesses highlighted the importance of Chairwoman Nydia Velazquez’s bill, H.R. 6054 Small Business Lending Disclosure Act of 2021, which extends certain protections to small business lending and expands the Consumer Financial Protection Bureau’s (CFPB) regulatory authority regarding consumer financial products and services to include small business financing.
OFN supports legislative and regulatory action that facilitates greater transparency in access to credit for small businesses, especially women- and minority-owned businesses. We are pleased to work with RBLC to build support for H.R. 6054 Small Business Lending Disclosure Act of 2021 and other legislation ensuring transparency in small business lending.
More testimony highlights:
- RBLC Chair Joyce Klein discussed the Coalition’s commitment to innovation in small business lending as well as concerns regarding the rise of irresponsible small business lending practices. Additionally, Klein highlighted the Small Business Borrowers’ Bill of Rights, which identifies six fundamental financing rights for small businesses to access fair lending. OFN is a member of RBLC and serves on its Executive Committee
- Subcommittee Chair Dean Phillips (D-MN) inquired about standards on which Congress and the SBA should consider regarding allowing fintech companies to participate in existing SBA programs. Diane Paterson responded by highlighting support for fintech accessibility while also noting the importance of transparency and reporting certain data points on fintech loans like default rates. She also noted how small business owners need transparency in order to understand loan terms and fees.
- Camino Financial’s Sean Salas also shared the significance of including the Annual Percentage Rate (APR) as a metric for ensuring transparency for small business lending. Additionally, he noted how Camino Financial is prioritizing the disclosure of APR early in the lending process.
- Small Business Committee Chair Nydia Velázquez (D-NY) shared how underserved small business owners are more susceptible to predatory lending practices and discussed the importance of H.R. 6054.
- Rep. Judy Chu (D-CA) expressed support for the RBLC’s Small Business Borrowers’ Bill of Rights. In addition to sharing support for making the SBA’s Community Advantage program permanent, Rep. Chu applauded the recent updates made to the program and shared how bringing more lenders into it may safeguard more small businesses from predatory practices.
- Rep. Scott Fitzgerald (R-WI) mentioned forthcoming legislation limiting the CFPB’s small business lending data collection and the challenges of Dodd-Frank Section 1071 reporting requirements. Other Republican committee members noted identical concerns regarding small business data collection and the CFPB during their questioning.