Brown and Rubio Re-Introduce Legislation to Protect Small Businesses from Predatory Lenders
WASHINGTON, D.C. – Today, U.S. Senators Sherrod Brown (D-OH), Chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, and Marco Rubio (R-FL) re-introduced legislation to protect small businesses from fly-by-night predatory lenders.
“When we let financial predators harm hardworking Americans through scams like confessions of judgment, we undermine the dignity of work,” said Brown. “This bipartisan bill would protect consumers and small business owners from predatory lenders that use legal tricks to strip away their hard earned money.”
“With this bill, we are taking another step toward protecting America’s small businesses—the foundation of our economy—by preserving the right of a business to be heard in a court of law before a potential credit default,” Rubio said. “I remain committed to protecting our small businesses from predatory, out-of-state lenders, and I urge my colleagues to join me in this effort.”
The Small Business Lending Fairness Act:
- Codifies the FTC’s 1985 ban on confessions of judgment in law in consumer loan contracts, and
- Expands the ban to provide these protections to business borrowers as well.
The bill text can be found here.
Confessions of judgment require a borrower to give up their rights in court before obtaining a loan, and allow shady lenders to seize the borrower’s assets without warning in order to pay off the debt. Although many states have banned this practice for small business loans as well as individuals, borrowers nationwide are still left exposed due to loopholes in state laws that have allowed predators to devastate small businesses across the country. The Small Business Lending Fairness Act gives small businesses federal protections like the ones consumers already have. Senators Brown and Rubio previously introduced this legislation in 2018 and 2019.
In 2018, Bloomberg published an in-depth investigative report on this shady small business lending tactic which has allowed creditors to steal the savings of tens of thousands of borrowers with no notice or opportunity for defense.
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