Pacific Community Ventures Has Signed The Small Business Borrowers’ Bill Of Rights

SAN FRANCISCO - Oct. 29, 2015 - PRLog -- Pacific Community Ventures is alarmed at the rise of predatory small business lending. Small business owners are struggling through many of the problems we saw in the subprime mortgage and payday lending crises. But there’s a critical difference—predatory small business lending is still young enough that we can slow or even stop it, if we act quickly.

That’s why Pacific Community Ventures has today signed the Small Business Borrowers’ Bill Of Rights.

As America’s workers and small businesses start to regain some solid footing in the aftermath of the great recession, it’s important to remember that small businesses have helped create the lions’ share of the jobs during the recovery, but bank lending and state investments in them are down.

Although the decline in bank lending to small businesses and new innovations from financial technology startups have opened up opportunities for new players to enter the market, these trends have also given rise to disturbing practices we’ve seen elsewhere in the lending industry. From the Aspen Institute, “These include lack of transparency about rates and the full costs and terms of borrowing; “stacking,” in which lenders layer multiple loans on top of each other; and “debt traps,” created when lenders advance more funds than a borrower can reasonably be expected to repay without having to refinance the debt.”

These practices come at a high cost to small business owners. Because many financing companies get repaid by taking a daily ‘cut’ directly from a business’ bank account or credit card receipts, they are first in line to be repaid – even if the business needs the cash to stay afloat. By making this Small Business Borrowers’ Bill of Rights a standard of small business lending, we can help stop small business predatory lending.

Fairness In Lending Is A Small Business Owner’s Right

The Small Business Borrowers’ Bill of Rights, is designed to build trust and provide guarantees for small business owners looking to grow through funding. Contained within the agreement are a number of industry requirements.

The six rights are:

1. The Right to Transparent Pricing and Terms. Every borrower deserves the right to be presented the terms of a loan or financing product in plain English.

2. The Right to Non-Abusive Products. Lenders should abstain from predatory practices such as debt traps, “double dipping” (charging loan fees twice on unpaid debt during a refinance) and unearned interest.

3. The Right to Responsible Underwriting. Not only should lenders have high confidence that their borrowers can repay their entire debt burden without defaulting or re-borrowing, it is the lender’s responsibility to only offer financing that meets the borrower’s need, rather than maximizing the lender or broker’s return.

4. The Right to Fair Treatment from Brokers. To enable borrowers to make informed decisions about their credit options, brokers should disclose all loan options for which the borrower qualifies through the broker’s services and educate borrowers on each loan option before they sign a loan document.

5. The Right to Fair Collections Practices. Every borrower should be fairly treated in the collection of consumer debts.

6. The Right to Inclusive Credit Access. All should be afforded fair and equal opportunity to credit.