WASHINGTON – U.S. Senator John Boozman (R-AR) is leading a Senate Republican effort fighting against the Biden administration’s attempt to pick small business winners and losers based on social factors.
The Small LENDER Act would block the Consumer Financial Protection Bureau (CFPB) from requiring community banks and lenders to collect and report social data on small businesses seeking loans. Instead of focusing on creditworthiness, the CFPB proposal would require lenders to solicit the race, gender, and ethnicity of small business borrowers and divulge it to federal bureaucrats in Washington. The move would prioritize these social factors, place additional red tape before lenders and make it harder for small businesses to access capital.
“Small businesses are experiencing historic inflation rates, skyrocketing energy costs and supply chain disruptions as a result of the Biden administration’s policies. They are the backbone of the economy, and the CFPB’s proposal would add yet another burden by driving up the cost of capital. The Small LENDER Act encourages investment and ensures access to financing by preventing the agency from imposing an unfunded mandate on many community banks and small lenders,” Boozman said.
The Small LENDER Act would:
- Exempt the smallest lenders by establishing a 500-covered transaction threshold;
- Provide small business relief by codifying a small business as one with $1 million or less in revenue; and
- Give lenders and small businesses more time to comply by establishing a three-year implementation schedule plus a two-year grace period.
Cosponsors of the bill include Senators Kevin Cramer (R-ND), Cynthia Lummis (R-WY) and Thom Tillis (R-NC).
Companion legislation was introduced in the U.S. House of Representatives by Congressman French Hill (R-AR).
“Access to capital for small businesses is the lifeblood of our local communities, and smaller lenders across central Arkansas often lead the way in investing in the neighborhoods they serve. The proposed regulation by the Consumer Financial Protection Bureau would make the cost of credit more expensive and impose significant compliance costs on smaller companies,” Hill said. “The Small LENDER Act will make necessary changes to exempt smaller banks and lenders from having to comply with the CFPB’s new, onerous small business data collection regulation. I thank fellow Arkansan, Senator Boozman, for leading this effort in the Senate and introducing companion legislation to my bill, H.R. 6732, the Small LENDER Act.”
The Small LENDER Act is supported by the Arkansas Bankers Association, the Independent Community Bankers Association, the Credit Union National Association, the National Association of Federally-Insured Credit Unions and the Equipment Leasing and Finance Association.