Recently the Responsible Business Lending Coalition (RBLC), of which Opportunity Fund is a founding member, released an update to the Small Business Borrower’s Bill of Rights (BBOR). The BBOR consists of six fundamental rights that business owners seeking financing deserve along with the specific practices that lenders and brokers must abide by in order to uphold and protect those rights. These rights are endorsed by Signatories and Endorsers that believe in the fair treatment of small business borrowers. As our research has shown, many business owners face unaffordable and unsustainable financing options – this effort seeks to uphold the responsible practices in our marketplace.
Opportunity Fund is proud to see the positive impacts this effort has had on the small business finance industry and is pleased with the ways these principles have been further strengthened. The main updates include:
• APR Disclosure: Lenders and brokers are now required to disclose Annual Percentage Rate (APR) and the annualized interest rate if one is used. It also requires that lenders and brokers use clear terms to disclose the total amount paid to a borrower and clear language to disclose monthly payment amount.
• Fair Warning: Additionally, lenders and brokers must now provide a fair warning label when referring an applicant to another lender who is not a BBOR Signatory.
• Appropriate Use: The new language includes a provision requiring lenders to match loan product design with loan product use as well as language to clarify that a lender should not make loans a borrower cannot afford.
• Complaints: Signatories are required to respond to complaints in a timely manner. In addition, the Responsible Business Lending Coalition developed an official process for any complaints from consumers or other parties related to lenders and brokers who have signed onto the BBOR.
A new provision has been added requiring a broker to post information on their website regarding the type and terms of financing secured by borrowers who obtained financing through the brokers’ services. Language has also been added requiring a lender to respond to complaints in a timely manner.
Collectively, the updates to the Small Business Borrower’s Bill of Rights represents many responsible lenders, brokers and other national and local organizations’ commitment to providing small businesses with access to transparent and responsible financial products.