For Second Year in a Row, Bill Doesn’t Get a Vote in House Committee

For Immediate Release:
May 20, 2024

Isabelle Dienstag | (224) 619-9001

ILLINOIS – Despite being passed by an overwhelming majority of the State Senate (36-19) and
backed by a large coalition of advocates encompassing the entire state and representing over
250,000 small businesses, a bill to provide small businesses with basic disclosure protections
when borrowing money was not called for a vote in the House Financial Institutions Committee.
The Small Business Financing Transparency Act (SB2234 – Belt/Tarver) would require
“nonbank” lenders to disclose the annual percentage rate (APR) of their loans to small business

The statewide coalition in support of the bill includes the Illinois State Black Chamber of
Commerce, the Illinois Hispanic Chamber of Commerce, the Southland Chicago Black Chamber
of Commerce, the Responsible Business Lending Coalition, Woodstock Institute, Small
Business Majority, and others. There were over 60 proponents of the bill, consisting of
organizations, businesses, and individual citizens. There were fewer than 10 opponents.
There was no explanation for not calling the bill. A prior version of the bill met with the same fate
last year when the bill was sent to a sub-committee for “a subject matter hearing.”

The bill would apply to loans made by “nonbank lenders,” lenders that almost exclusively reside
on the internet. Because small businesses in Black, Brown, and lower income communities do
not receive their proportionate share of loans from banks, they are more frequently forced to
turn to the nonbank lenders. It is not uncommon for such lenders to charge more than 300%
APR, but this APR is not disclosed to the small business borrower.

The federal Truth In Lending Act (TILA), which took effect 55 years ago, entitles Individual
consumers to APR disclosures when they get a mortgage, credit card, student loan, or any
other type of loan. TILA does not cover small businesses. The Small Business Financing
Transparency Act would have closed the “APR Disclosure Loophole” by requiring nonbank
lenders to disclose APRs to small businesses. California and New York have adopted laws
similar to SB 2234.

“This is an issue of transparency and equity for small businesses,” said Jaime di Paulo,
President & CEO of the Illinois Hispanic Chamber of Commerce.
“We will not stop
advocating for minority-owned businesses to get access to capital without predatory lenders
threatening their futures.”

“Not only is protecting small businesses from predatory lending the right thing to do, but this
legislation has the full backing of industry experts and small business leaders,” said Tasha
Brown, Illinois Director of Small Business Majority.
“Despite the evidence and support
behind reform, Illinois small businesses will continue to be targeted by nonbank lenders
charging exorbitant interest rates–unbeknownst to the borrower–thanks to the inaction of House
committee members.”

“SB 2234 is long overdue. President Lyndon B. Johnson signed the law in 1968 that gave
individual consumers like you and me the right to know the APR of a loan,” said Brent Adams,
Senior Vice President of Policy & Advocacy at Woodstock Institute.
“It is high time we
close the APR disclosure loophole and empower small businesses with the information they
need to protect themselves. Transparency is good for small businesses, the communities in
which they reside, and the State’s overall economy.”

A recent analysis by the Responsible Business Lending Coalition found that SB 2234 would
save Illinois small businesses an estimated $175 million to $835 million dollars each year in
unnecessary interest and fees, simply by empowering business owners to make better-informed
price comparisons. Latino/a business owners would save $22 million to $104 million, and Black
business owners would save an estimated $24 million to $112 million a year.