When you have something important to say, it feels so good to know someone is listening. For the past several years Opportunity Fund has been speaking out on the concerning practices we are seeing in the small business alternative financing sector. Although many policymakers expressed interest in learning more about the issues, no concrete action has been taken to protect entrepreneurs from these new and often damaging financial products. That may soon change: the Consumer Financial Protection Bureau (CFPB) recently announced their two year policy priorities, which include this vision statement about small business lending:
“The CFPB envisions a small business lending market where fair lending laws are enforced and where communities, governmental entities, and creditors have access to the data needed to identify the business and community development needs and opportunities of women-owned, minority-owned, and small businesses.”
The CFPB was created to protect consumers. Opportunity Fund believes that small business owners should be treated (and protected) as consumers, since most are sole-proprietorships run by the same individuals managing the average American household. There are no CFOs managing the finances of these small businesses. In addition to the broad vision laid out by the CFPB, (which importantly includes small business owners as deserving of inclusion under fair lending laws), they also indicated that they may “build the infrastructure to intake and analyze small business lending complaints.” In other words, the CFPB won’t just collect data on the industry from the industry itself – they will also hear firsthand from consumers who struggled after taking out irresponsible, predatory loans. This data would then be publically available for advocates and others to use to highlight trends and call out bad actors.
From what we have seen for other consumer financial products (like mortgages, payday loans, and student loans), collecting complaints is an important first step towards broader oversight. It makes sense – you can’t manage it until you measure it. We commend the CFPB for taking this first important step towards protecting ‘mom & pop’ business owners across the country!