Published September 14, 2017 05:31
ADVOCATES URGE CFPB TO HELP SMALL BUSINESS OWNERS BY IMPLEMENTING 1071 SMALL BUSINESS RULE QUICKLY
San Francisco, CA, September 14, 2017 —The California Reinvestment Coalition released a new report today, focused on the challenges small business owners face when trying to get a loan to start, maintain or grow their businesses. The report is being submitted to the Consumer Financial Protection Bureau, along with a letter from 61 nonprofits, urging the Bureau to move quickly on implementing its new 1071 rule that will dramatically increase transparency in the small business lending market.
In addition, nine statewide and local chambers of commerce and small business associations located in California also submitted a letter to the CFPB, in strong support of the increased transparency that the 1071 rule will create for small business owners.
Top-level findings from CRC’s new report:
• 100% of respondents believe the CFPB should make the Bureau’s consumer complaint database more user friendly for small businesses;
• 95% of respondents believe the increased transparency from the CFPB’s 1071 small business lending data rule is of critical importance (57%) or very important (38%);
• 95% of respondents believe the CA Dept. of Business Oversight should increase regulation and enforcement of non-bank and fintech lending practices, including Merchant Cash Advances; and
• 54% of respondents said that small businesses “often” face displacement, with another 32% saying they “sometimes” face displacement.
“We surveyed more than forty nonprofits in California who have worked with over 10,000 small business owners during 2017,” explains Kevin Stein, deputy director of the California Reinvestment Coalition. “It was disappointing to read that more than half the respondents believe that small business owners still face discrimination based on race, sex, age, national origin, marital status, or for receiving public assistance. These findings highlight the importance of the CFPB’s 1071 rule to identify and address discrimination in the small business lending marketplace.”
“I started my business from humble beginnings, out of the back of my car,” explains Reyna Chavez, owner of Scrubs on the Run, a medical uniform supply company based in Ventura, California. “As my business picked up speed, I needed more inventory, but when I applied for a bank loan, I was denied. Fortunately, I was able to get a loan and support for my small business from a nonprofit, Women’s Economic Ventures. I’m proud to report I now have four employees and three locations. I would encourage the CFPB to move as quickly as possible on the challenges that people like me are facing in obtaining loans to start and grow our businesses.”
“This level of lending transparency already exists for the mortgage industry, and it’s been a vital way to identify disparities and take corrective action,” comments Clarence Williams, CEO of California Capital. “It’s high time we bring this transparency to the small business lending world as well.”
“The number one need of small business owners is access to safe, non-predatory capital,” explains Juan Carlos Hernandez, chair of the San Diego Hispanic Chamber of Commerce. “But, as big banks have reduced their lending, we’ve seen unscrupulous lenders move in, peddling costly products that can ultimately sink a business instead of helping it out. This new rule can help uncover this harm and will hopefully spur better, more responsible lending.”
“The data that’s currently available to the public on small business lending is extremely limited, which is why we need the CFPB’s 1071 rule,” explains Robert Villarreal, president of the Small Business Finance Fund. “As the CFPB develops and begins enforcing this rule, we expect to see greater transparency, accountability, and economic development, especially in communities that are currently being ignored.”
“In our many years of working with women small business owners, we’ve seen the life-changing impact running a small business can have,” explains Devon Johnson, director of lending at Women’s Economic Ventures. “We strongly support the CFPB’s work to increase transparency and accountability, including in the small business lending space.”
To view the letter from CRC and 60 other organizations responding to the CFPB’s Request for Information, click here.
The following statewide and local Chambers of Commerce and small business associations located in California also sent a separate letter, in support of the 1071 rule:
CA Asian Pacific Chamber of Commerce
CA Association for Micro Enterprise Opportunity
CA Black Chamber of Commerce
CA Hispanic Chambers of Commerce
National Association of Women Business Owners, Sacramento Valley
San Diego County Hispanic Chamber of Commerce
Small Business California
Small Business Majority