Introduces Legislation to Preserve Small Business Access to Capital

WASHINGTON – Following the release of a Biden administration final rule forcing small businesses to comply with burdensome social reporting requirements, U.S. Senator John Boozman (R-AR) is leading legislation to fight this overreach.

The Small LENDER Act wouldblock the Consumer Financial Protection Bureau (CFPB) from requiring community banks and lenders to collect and report social data on small businesses seeking loans. Instead of focusing on creditworthiness, the CFPB rule would require lenders to solicit the race, gender and ethnicity of small business borrowers and divulge it to federal bureaucrats in Washington. The move would prioritize these social factors, place additional red tape before lenders and make it harder for small businesses to access capital.

“The Biden administration’s initial proposal featured hurdles for small businesses that would have prevented growth and predictability, and unfortunately it didn’t fix those mistakes in the final version. The CFPB’s rule adds yet another burden by driving up the cost of capital and politicizing small business lending on the basis of social factors. The Small LENDER Act encourages investment and ensures access to financing by preventing the agency from imposing an unfunded mandate on many community banks and small lenders that invest in the backbones of our economy,” Boozman said.

The Small LENDER Act would:

• Exempt the smallest lenders by establishing a 500-covered transaction threshold;

• Provide small business relief by codifying a small business as one with $1 million or less in revenue; and

• Give lenders and small businesses more time to comply by establishing a three-year implementation schedule plus a two-year grace period.
  

Senators Chuck Grassley (R-IA), Kevin Cramer (R-ND), John Kennedy (R-LA), Cynthia Lummis (R-WY) and Steve Daines (R-MT) are cosponsors.

“The Biden administration’s ridiculous reporting requirements make it harder for entrepreneurs and small business owners to access the capital they need to succeed. As a result, our communities and economy will be robbed of the benefits that only small businesses can provide. I’m proud to join my colleagues in legislation to combat this rule and fight for Main Street,” Grassley said.

“Washington bureaucrats and the Biden administration have fallen so far down the identity politics rabbit hole they actually think banks and lenders should focus on factors like race, gender, and ethnicity instead of the creditworthiness of their clients," said Cramer. “Our bill blocks attempts to politicize lending and ensures small businesses are not burdened by the CFPB’s new costly regulation.”

“The White House’s misguided woke policies put Louisiana’s small business owners at risk. Already struggling under historic inflation, these job creators can’t afford to lose access to capital. Congress must stop the Biden administration’s virtue signaling from penalizing small businesses that serve our communities and local economies—and that is what this bill would do,” said Kennedy.

“Wyoming’s economy depends on small businesses that continue to struggle due to inflation, yet the Biden administration seems committed to aiding in that struggle. Business decisions should be made based on numbers, not on the appearance or demographic of the business owner. The Biden administration’s continued efforts to politicize our finances is irresponsible and short-sighted. Proud to join my colleagues to introduce the Small LENDER Act to combat this bad policy,” Lummis said.

“Biden’s sky-high inflation is making it hard enough for small businesses to thrive; the last thing Montana businesses need to be worrying about is discrimination from financial institutions based on Biden and Senate Democrats’ woke hierarchy of identity politics. Banks should do business based on credit worthiness, not on wokeness,” Daines said.

Companion legislation was introduced in the U.S. House of Representatives by Congressman French Hill (R-AR).

“I was proud to see the Small LENDER Act reintroduced by Senator Boozman and I thank him for working to ensure small banks are not subjected to the same compliance criteria as large businesses,” Hill said.

The Small LENDER Act is endorsed by the Arkansas Bankers Association, Independent Community Bankers Association, Credit Union National Association, First Security Bank and Farmers & Merchants Bank.