On November 18, 2021, Sen. Menendez introduced S. 3235 the Small Business Lending Disclosure Act of 2021 (the Act).  The bill was read twice and referred to the Committee on Banking, Housing, and Urban Affairs.

The Act aims to apply the Truth in Lending Act (15 U.S.C. § 1601 et seq.)  to small business financing by adding a new Chapter 6.  The term “small business financing” is defined in the Act as any line of credit, closed-end commercial credit, sales-based financing, or other non-equity obligation by an entity for $2,500,000, and that is not primarily for personal, family, or household purposes.

Providers of small business financing will be required to issue consumer-like disclosures of the financing amount, annual percentage rate, payment amount, term, finance charge, prepayment costs/savings, and collateral requirements at the time of the extension of credit.

CS continues to monitor this legislation for any impact to our solution and will inform our clients and partners of any required changes.