Small businesses seeking loans to recover from the COVID-19 pandemic will soon have the information they need to make better borrowing decisions, thanks to the NYS Small Business Truth in Lending Act.
“The NYS Small Business Truth in Lending Act will bring common-sense transparency standards to small business financing at a time when it’s needed most,” said Linda MacFarlane, Chair of the New York State CDFI Coalition, who serves as the Executive Director of the Community Loan Fund of the Capital Region, Inc.
One of her clients, a certified Minority Business Enterprise, needed cash to add to his inventory, and borrowed money from an online source. He then saw the daily repayment withdrawals from his bank account were much higher than he agreed to — and the debt service nearly closed down his store. Her client was told he must not have read the fine print in the agreement, and learned that overall interest was in the triple digits. The Community Loan Fund stepped in, paid off the loan and gave him a line of credit for new inventory and a small loan for store remodeling.
“CDFIs are committed to offering loans in a fair, affordable and transparent manner,” said MacFarlane. “Unfortunately, some lenders have made it hard for small businesses to compare the true cost of their offers. CDFI Coalition members around the state are pleased to see that this measure will require lenders to disclose annual percentage rate (APR) and repayment terms.”
“Fair and honest lenders have nothing to fear with regard to transparency and the adoption of standard terms to describe the cost of loans,” said CDFI Coalition board member Kim Jacobs, President/CEO of Community Capital New York based in Elmsford. “This is a great opportunity for Governor Cuomo to help protect the small businesses in our state who are already overwhelmed dealing with the impacts of COVID-19 by swiftly signing this measure into law. We applaud NYS Senator Kevin Thomas and Assemblyman Ken Zebrowski for their leadership on this important issue.”
“The passage of the New York State Small Business Truth in Lending Act (A10118 / S5470) represents a victory for New York’s small business owners,” said Dafina Williams, Senior Vice President of Public Policy at Opportunity Finance Network (OFN) and Executive Committee member of the Responsible Business Lending Coalition (RBLC). “Bringing much-needed transparency to commercial lending, this bill equips entrepreneurs with the tools needed to easily compare financing options – allowing them to make the best financial decisions for their businesses. The RBLC thanks Assemblyman Zebrowski and Senator Thomas for their leadership and urges Governor Cuomo to promptly sign New York’s first-ever small business lending transparency bill into law.”
The NYS Community Development Financial Institutions (CDFI) Coalition represents the institutions that make innovative financing possible, foster financially vibrant and healthy communities, and strengthen all regions of New York State.