CFPB seeks to increase the transparency of loans to small businesses

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The Consumer Financial Protection Bureau recently developed a rule that should help improve transparency around small business loans.

The proposed rule would require lenders to collect and report all relevant information about credit applications, such as pricing and demographics, as well as the reasons for loan denial.

During the COVID-19 pandemic, many entrepreneurs struggled to access relief funds, which is one of the reasons this rule was proposed. The bureau also announced that it will create a web portal where small businesses can share their experiences with the regulator when it comes to applying for credit.

This rule would apply to a wide range of credit services, including lines of credit, credit cards, term loans, and cash advances to merchants. This should help regulators see how entrepreneurs fare when trying to get financing and what obstacles might prevent them from doing so. The rule was proposed on September 1, and the public has 90 days to comment on it.

“After home ownership, small business ownership is the primary means through which families and communities create wealth,” CFPB Acting Director Dave Uejio said, and added: “Still too much often, small business development is starved for lack of access to responsible and affordable credit. . “

The CFPB is a US government agency that works to ensure that lenders, banks, and other financial institutions treat consumers fairly. She is committed to producing innovative tools and resources to help clients develop their financial skills and make sound financial decisions.

CFPB learns about customer needs through research and data analysis and publishes information gathered on the consumer financial market. It also implements and enforces federal consumer finance laws to preserve consumer choices and ensure fairness and transparency in financial products and services to consumers. Once a new regulation is in place, the CFPB provides support and resources to help stakeholders understand and follow the rule.


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