Predatory lending costs American borrowers an eye-popping $25 billion a year, according to estimates from the Center for Responsible Lending.
Given that finding, small wonder that a new poll by the advocacy group Small Business Majority shows small businesses support measures that would help shield them from predatory lending practices.
The revelation is part of a fresh scientific opinion poll that found most small business owners support multiple policies that could help boost the availability of traditional loans and make alternative lending sources safer. Some 87% of small business owners back a “truth in lending” act for small business lending to ensure loan rates and terms are both consistent and transparent.
The survey also found 77% of small business owners approve of a policy that would increase the amount of small business lending done by credit unions by lifting the cap on the number of loans they can underwrite. Further, 62% of small businesses support policies like the Community Reinvestment Act, a federal law that requires banks and savings association to invest in low-income neighborhoods.
“I’m thinking about applying for a loan that would help me grow my business and make it more competitive, but I have very few affordable or reliable options,” Sharon Levy, owner of Taking Tea InStyle L.L.C. in Princeton, New Jersey, stated in a press release.
“Traditional banks have a lot of requirements that many small businesses just can’t satisfy, while online lenders are largely unregulated and can take advantage of small businesses that are desperate for capital. Small business owners simply don’t have enough good lending options, which is why we need better policies in place to give small businesses a level playing field and a safer environment in which to conduct business.” Further, the poll found small businesses support institutions that protect borrowers.
Three in four small business owners support the Consumer Financial Protection Bureau, a federal agency that oversees mortgages, credit cards, and other consumer financial products and services.
“Far too many entrepreneurs have difficulty obtaining the capital they need to start and expand their business,” said John Arensmeyer, Small Business Majority founder & CEO.
“When they are able to get financing, they need that capital to be safely and responsibly administered. As these poll results show, small business owners are strongly supportive of policies and institutions that increase the availability of small business loans from traditional sources like small banks and credit unions, while also shielding them from predatory lending practices.”
Conducted by Chesapeake Beach Consulting on behalf of Small Business Majority, the survey reflects interviews with 500 small business owners nationally with 1 to 100 employees.