Truth-in-Lending Law is a Big Win for California’s Small Businesses
Statement by Mark Herbert, California Director for Small Business Majority, on why California’s groundbreaking lending transparency law is great news for the state’s small firms
Gov. Brown showed how much he values small businesses when he signed the nation’s first small business truth-in-lending law. SB 1235 is a significant step toward protecting small business owners from predatory lending practices because it will dramatically increase the transparency of financial products marketed to small firms.
While the federal Truth in Lending Act protects consumers, it does not specifically protect small businesses. SB 1235 will provide the Department of Business Oversight the flexibility to set disclosure standards that provide small business owners with transparency without restricting responsible business practices. These requirements will give small businesses the ability to compare products and make informed borrowing decisions, while protecting them from predatory lenders.
A scientific opinion poll conducted on behalf of Small Business Majority found predatory lending, particularly by online lenders, is a concern for California small business owners. In fact, 8 in 10 California small business owners reported that they are in favor of regulating online lenders to ensure interest rates and fees are clearly disclosed to borrowers.
Small Business Majority helped lead a coalition of more than 60 organizations in support of SB 1235 because greater transparency in lending products will help more small businesses grow and succeed. This law will extend important protections to small businesses, and we hope it serves as a model for other states.
About Small Business Majority
Small Business Majority was founded and is run by small business owners to ensure America’s entrepreneurs are a key part of a thriving and inclusive economy. We actively engage our network of more than 58,000 small business owners in support of public policy solutions and deliver information and resources to entrepreneurs that promote small business growth. Our extensive scientific polling, focus groups and economic research help us educate and inform policymakers, the media and other stakeholders about key issues impacting small businesses and freelancers. Learn more about us on our website and follow us on Twitter, Facebook and Instagram.