Marco Rubio Intros Measure to Protect Small Business Owners from Nefarious Lenders
Senator Marco Rubio (R-FL) introduced a bipartisan bill that he says would protect small businesses by closing a loophole used by nefarious lenders and allowing the ability for them to be heard in a court of law. Introduced with Senator Sherrod Brown (D-OH), the Small Business Fair Lending Act codifies the Federal Trade Commission’s (FTC) 1985 ban on confessions of judgment and extends it to include small business borrowers. Confessions of judgment require a borrower to give up their rights in court before obtaining a loan and allow the lender to seize the borrower’s assets, without warning, in order to satisfy the debt. Although many states have banned this practice for small business loans and for individuals, borrowers remain exposed due to the current FTC loophole. This bill would provide small businesses with the same protections consumers already have. Bloomberg published an in-depth investigative report last month on this lending tactic, which has allowed creditors to destroy the lives of tens of thousands of borrowers without notice or opportunity for defense. “With this new 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. Nearly 8 million small businesses in the U.S. are owned by people of color. More here.