This week, U.S. Sen. Marco Rubio, R-Fla., teamed up again with U.S. Sen. Sherrod Brown, D-Ohio, to bring back their proposal which, they insist, will help small businesses.
After bringing it out for the first time in December, Rubio and Brown brought back the “Small Business Fair Lending Act” on Tuesday. The senators insist their bill will “protect small businesses by closing a loophole used by nefarious lenders, and allowing the ability for them to be heard in a court of law" and “bill codifies the Federal Trade Commission’s (FTC) 1985 ban on confessions of judgment, and extends it to include small business borrowers. Confessions of judgment require a borrower to give up his or her rights in court before obtaining a loan, and allows the lender to seize the borrower’s assets, without warning, in order to satisfy the debt.”
“With this bill, we are taking another step toward protecting America’s small businesses—the foundation of our economy—by preserving the right of a business to be heard in a court of law before a potential credit default,” Rubio said. “I remain committed to protecting our small businesses from predatory, out-of-state lenders, and I hope my colleagues will join me in this effort.”
“When we let financial predators harm hardworking Americans through scams like confessions of judgment, we undermine the dignity of work,” Brown said. “This bipartisan bill ensures that consumers and small business owners benefit from protections that prevent predatory lenders from stripping away their hard earned money under cover of night.”
Rubio’s office offered the rationale behind the Florida Republican's bill
“Although many states have banned this practice for small business loans and for individuals, borrowers remain exposed due to the current FTC loophole. The Small Business Lending Fairness Act provides small businesses with the same protections consumers already have. Last month, Bloomberg published an in-depth investigative report on this unscrupulous lending tactic, which has allowed creditors to destroy the lives of tens of thousands of borrowers without notice or opportunity for defense,” Rubio’s office noted.
The bill was sent to the Senate Banking, Housing, and Urban Affairs Committee where Brown is the top Democrat.