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Community Development Orgs Support NYS Small Biz Truth in Lending Act

Call on Senate Banks Committee to Advance S. 5470



As portions of New York State begin to reopen during the Coronavirus pandemic, community development organizations are supporting legislation that will help small businesses recover.


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.

“We applaud Senator Kevin Thomas for drafting the NYS Small Business Truth in Lending Act to help business owners make informed choices about their borrowing options,“ said Linda MacFarlane, the nonprofit association’s Chair, based in Albany. “As community lenders, CDFIs too often see the damage that’s been done when business owners realize too late that their loans have very high interest rates and fees or severe prepayment penalties. CDFIs are committed to offering loans in a fair, affordable and transparent manner. Our members around the state offer their full support for a measure that will require other lenders to behave in the same way.”

The companion bill in the Assembly (A.10118) is sponsored by Assemblyman Ken Zebrowski (D-Rockland County). This historic bill builds on the small business truth-in-lending legislation passed in California in 2018 with overwhelming bipartisan support. New York small business owners could save millions of dollars annually when empowered by the basic price transparency information needed to navigate financial products in the marketplace.

According to Hubert Van Tol, the association’s Vice Chair, “Here in Rochester, small businesses are doing all they can to stay afloat, changing their product offerings and taking out loans. Unfortunately, small businesses are left in the dark on the true cost of some offers. The federal Truth in Lending Act (TILA) requires standardized disclosures for consumer lending, including the annual percentage rate (APR) and repayment terms, but does not apply to financing for business purposes. The NYS Truth in Lending Act will bring common-sense transparency standards to small business financing at a time when they’re needed most.”

“The lack of disclosure standards makes it nearly impossible for New York’s business owners to compare offers and choose the best option for their business, potentially leading them into a debt trap,” said Kim Jacobs, who serves as the association’s Treasurer. “In Westchester County, businesses are struggling and need financing to reopen. We support Senator Thomas’ bill, S. 5470 as amended in March 2020, that would require all small business financing providers to disclose the terms of their loans, and urge the Senate Banks Committee to reject any amendments that would create carveouts for high-cost finance companies and perpetuate confusion for small businesses.”

"We have seen first-hand the devastating effects some unscrupulous online enders have had on business owners in New York City,” said Yanki Tshering, CDFI Coalition board member. “They realize only too late that even refinancing the loan does not get them off the hook for paying the interest and fees for the full term of the loan. One business that came to BCNA for help paid $40,000 in interest and fees for a $50,000 loan for a two-year term. As our communities reopen from the COVID- 19 Pause, there will be many more desperate business owners and we are very, very concerned that if we do not have stronger regulations in place, they will fall victim to predatory lenders."

“In Chautauqua County, businesses often come to us seeking to refinance high-cost debt that was presented to them without an APR and later proved to be unaffordable,” said John Felton, CDFI Coalition board member. “Sometimes we can help the business refinance the debt, but sometimes it’s too late and the business goes under. Now more than ever, New York businesses should be able to trust that all financing offers will include an APR or estimated APR so they can compare loans on an ‘apples-to-apples’ basis. Businesses also need other key metrics such as the monthly payment amount so they can compare how various offers will affect their cash flow.”

Gwen O’Shea, President and CEO of Community Development Corporation of Long Island (CDCLI), said “As a community development nonprofit, CDCLI has worked for 50 years to help Nassau and Suffolk Counties grow and thrive. In this time of great uncertainty, we’re grateful for Senator Thomas’ leadership in sponsoring the NYS Small Business Truth in Lending Act. Business owners deserve the transparency that universal disclosure standards would bring, including APR for all products, and will need this transparency even more as they seek to rebuild from the COVID-19 crisis. We urge the NYS Senate to take up this important legislation before adjourning for the summer.”

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