Last week, U.S. Sens. Sherrod Brown, D-Ohio, and Marco Rubio, R-Fla., continued their push for the “Small Business Lending Fairness Act” which “seeks to protect small businesses by closing a loophole used by predatory lenders that prevents their ability to be heard in a court of law before a credit default.”
The two senators championed the bill in 2018 and 2019. The proposal “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.”
“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 on Wednesday. “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.”
“When we let financial predators harm hardworking Americans through scams like confessions of judgment, we undermine the dignity of work,” Brown said. “This bipartisan bill would protect consumers and small business owners from predatory lenders that use legal tricks to strip away their hard-earned money.”
“Although many states have banned this practice for small business loans as well as individuals, borrowers nationwide are still exposed due to loopholes in state laws that have allowed predatory lenders to devastate small businesses across the country. Although confessions of judgment are illegal in Florida, small business owners are being targeted by out-of-state lenders who operate within the state. The Small Business Lending Fairness Act provides small businesses with the same federal protections that consumers already have nationally,” Rubio’s office noted
Brown introduced the bill with Rubio as the only co-sponsor. The bill was sent to the U.S. Senate Banking, Housing, and Urban Affairs Committee on Wednesday. So far, there is no companion measure over in the U.S. House.
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