There are close to 30 million small businesses in the U.S. which account for 99.7% of all employer firms, deliver 46% of private-sector output, employ 49% of the workforce and generate 64% of new jobs. But despite their invaluable contribution to the local community and the national economy, they continue to experience difficulties in access to affordable financing.
Banks and other traditional lenders are often reluctant to extend loans to small businesses and this forces them to seek funding from poorly regulated and high-cost lenders.
One way to address the problem is to implement consumer data collection and require the Consumer Financial Protection Bureau’s (CFPB) to include small business lending in its data collection. The data should include pricing of all types of loans to small businesses from online lenders, banks and merchant cash advice.
This idea is actually nothing new since it is already required by Section 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Also, the charter of the CFPB stipulates that it should collect small business lending data.