Gov. Cuomo signs bill to protect small businesses getting loans to survive COVID-19 and other emergencies
ALBANY -- Governor Andrew Cuomo has signed legislation that protects the interests of New York’s small businesses who are taking out loans to survive the coronavirus pandemic and other emergencies.
The New York State Small Business Truth in Lending Act, Chapter 369 of the Laws of 2020, helps borrowers by requiring clear and comprehensive disclosures from all lenders.
The NYS Community Development Financial Institutions (CDFI) Coalition has been working with members across the state to build support for this common sense measure since it passed the Assembly and Senate in July.
“As we wait for the coronavirus vaccine to roll out, New York’s small businesses are struggling to hang on,” said Linda MacFarlane, chair of the NYS CDFI Coalition and executive director of Community Loan Fund of Capital Region.
“Unfortunately, some lenders have made it hard for small businesses to compare the true cost of their offers. CDFI Coalition members around the state are pleased to see that this measure will require lenders to disclose annual percentage rate (APR) and repayment terms.”
“CDFIs know too well how harmful predatory lending can be for small businesses, particularly during a crisis,” said Hubert VanTol, president of PathStone Enterprise Center in Rochester and vice chair of the NYS CDFI Coalition.
“That’s why we’re so pleased that Governor Cuomo signed the signed the NYS Small Business Truth in Lending Act. Now more than ever, New York businesses should be able to trust all lenders to clearly disclose their terms, so borrowers can compare loans on an ‘apples-to-apples’ basis.”
“Small businesses account for the vast majority of New York’s businesses and employ over half of the state’s workforce, but they are closing in record numbers due to COVID shutdowns,” said Kimberlie Jacobs, president/CEOCommunity Capital New York in Westchester County and CDFI Coalition board member.
“The provisions in this new law will deliver significant savings for small business borrowers. The Responsible Business Lending Coalition estimates that the NYS Small Business Truth in Lending Act will save New York’s small businesses more than $369 million annually in unnecessary finance charges. Minority-owned small businesses alone could save as much as $130 million a year.”
According to Carolynn Welch, executive director of the Westminster Economic Development Initiative in Buffalo and member of the Coalition, “CDFIs often help businesses get out from under crushing debt -- but sometimes, the damage has been done. Small businesses deserve straightforward disclosures from all financing providers so that they can make informed decisions and avoid debt traps.”
“The NYS Small Business Truth in Lending Act was endorsed by a wide range of lenders and small business advocates,” said Eric S. Levine, Esq., CEO of Alternatives Federal Credit Unionof in Ithaca and a member of the Coalition. “Fair and honest lenders have nothing to fear regarding transparency and the adoption of standard terms to describe the cost of loans.”
“The provisions of the New York State Small Business Truth in Lending Act (A.10118 / S.5470b) will help small business owners who are trying to recover from all of the setbacks of 2020,” Coalition Chair MacFarlane said.
“We applaud Governor Cuomo, Assemblyman Kenneth Zebrowski and Senator Kevin Thomas for their leadership, the NYS Department of Financial Services, the Responsible Business Lending Coalition, and CDFIs around the state who worked to give our small businesses the tools they need to keep their businesses going, support their employees and serve the needs of their communities.”
The New York State CDFI Coalition represents the institutions that make innovative financing possible, foster financially vibrant and healthy communities, and strengthen all regions of New York State.