As a lender on the frontlines of the small business finance revolution, Opportunity Fund has been calling attention to predatory lending practices for some time now. Because many of these concerning products are designed to avoid existing regulation, there is a need for policy makers to step in. While business owner education and voluntary reforms by lenders are part of the solution, new national regulation is also needed to insure transparency and eliminate the worst abuses. Therefore we were pleased to respond to the U.S. Treasury Department’s recent Request for Information related to Expanding Access to Credit through Online Marketplace Lending.
In our comments we discuss troubling practices Opportunity Fund has seen and the need for consumer protections for small business owners. We also describe what we believe is a role for banks to responsibly support this growing industry as well as a promising partnership with a marketplace lender. Many of our partners also submitted comments on the good and bad of this dynamic industry, highlighting the Small Business Borrower’s Bill of Rights we developed together as best practices for potential regulation. We hope this is an important next step in bringing needed oversight to financing many business owners rely on every day to keep their doors open.
Antonio Weiss, Counselor to U.S. Treasury Secretary Jacob Lew, summarized the feedback the Treasury Department received from Opportunity Fund and 98 other groups on the topic of expanding access to credit through online marketplace lending. Counselor Weiss’s summary includes the 6 key themes the Treasury found in the comments, and included mention of the Small Business Borrowers’ Bill of Rights (BBOR). Counselor Weiss called the BBOR: “a great example of progress that can be made by working collaboratively.” But noted that “Policymakers will need to assess whether these efforts are successful in creating high standards across the industry.” And we couldn’t agree more.