The Responsible Business Lending Coalition (RBLC), a group that includes online lenders LendingClub (NYSE:LC) and Funding Circle, has issued a statement in support of legislation introduced in both the US House and Senate.
The Small Business Lending Disclosure Act of 2021, is described as establishing “common-sense transparency standards in small business financing at a critical time of recovery for Main Street.”
The legislation, which was not immediately available, has garnered the support of key House and Senate leaders including Representative Maxine Waters, Representative Ed Perlmutter, Senator Sherrod Brown, and Senator Ben Cardin who were all lead cosponsors on the bill.
According to RBLC, the federal Truth in Lending Act ensures transparency in consumer lending but does not apply to small business financing. RBLC states that without the transparent disclosure of the Annual Percentage Rate (APR) on loans for homes, cars, credit cards and personal lending, a range of confusing or misleading ways of disclosing the true cost of financing has emerged in small business credit markets. This lack of transparency can make it difficult for small business owners to compare their financing options effectively, and can conceal APRs as high as 358%.
RBLC projects that the Small Business Lending Disclosure Act of 2021 will drive more than $4.7 billion in savings for nearly one million small businesses annually.