To protect small businesses from predatory business lending, especially as a result of financial hardships caused by the Coronavirus pandemic, the Governor/Minnesota Legislature adopts the following, Small Business Borrower Bill of Rights
RESOLUTION NO. _____________
WHEREAS, Minnesota is home to over 500,000 small businesses that make up 99.5 percent of all Minnesota businesses.
WHEREAS, Minnesota small businesses employ 1.3 million people.
WHEREAS, there are more than 47,000 minority owned businesses in Minnesota with over $7 billion in sales employing almost 85,000 people with an annual payroll of over $2.3 billion.
WHEREAS, there are over 150,000 female owned businesses in Minnesota with more than $24 billion in sales employing almost 200,000 people with an annual payroll of over $5 billion.
WHEREAS, minority and female-owned businesses are growing very rapidly in Minnesota and at the same time face barriers in their access to capital and often turn to alternative sources to finance their business plans.
WHEREAS, according to a study by the Federal Reserve Bank, nearly one third of small businesses that applied for credit in 2018 sought it from an online lender. Low-income zip codes have the lowest number of bank branches and the greatest number of alternative financial service providers.
WHEREAS, the success of Minnesota small and minority businesses are integral to the state’s overall economic growth and prosperity.
WHEREAS, Minnesota small, minority and female entrepreneurs face challenges accessing the capital they need to create, grow, and sustain their businesses and at the same time, are increasingly targeted with irresponsible lending practices.
WHEREAS, the Small Business Borrowers’ Bill of Rights addresses irresponsible small business lending concerns by detailing the rights that all small businesses seeking financing deserve.
WHEREAS, a small business borrower has the right to receive the cost and terms of any financing being offered, as early as possible, in writing and in a form that is clear, complete, and easy to compare with other financing options, so they can make the best decision for their business.
WHEREAS, a small business borrower has the right to receive an Annualized Percentage Rate (APR) disclosure for all financing products offered to them, as APR is the only established metric that enables informed comparisons of the cost of capital over time and between products of different dollar amounts and term lengths.
WHEREAS, a small business borrower has the right to expect that financing products will not trap the business in an expensive cycle of re-borrowing.
WHEREAS, a small business borrower has the right to expect a lender is offering financing based on underwriting practices that assess the ability of the borrower’s business to succeed and repay.
WHEREAS, a small business borrower has the right to honest, transparent, and impartial communications with all financing providers, brokers, and lead generators regarding loan options, conflicts of interest, fees, and the financing options available.
WHEREAS, a small business borrower has the right to fair and equal treatment when seeking a loan including protections guaranteed under the Equal Credit Opportunity Act.
WHEREAS, a small business borrower has the right to be treated fairly and respectfully throughout a collections process and the right to protections like those guaranteed under the Fair Debt Collection Practices Act.
WHEREAS, a small business borrower has the right to expect that financing providers do not use confessions of judgment or equivalent legal agreements by which a borrower preemptively agrees to lose disputes with the financing provider.
NOW, THEREFORE, MAY IT BE DULY RESOLVED BY ______ that the State of Minnesota hereby supports the principles detailed in the Small Business Borrowers’ Bill of Rights to promote the sustained growth and vitality of Minnesota small businesses.
PASSED and ADOPTED this ________ day of ____________, 2020.
Resolution for a Small Business Borrower Bill of Rights for Minnesota
Coalition calls for protection of small & minority businesses from predatory lending during Coronavirus Crisis: Adopt Small Business Borrowers’ Bill of Rights A coalition of community leaders and lenders are calling Governor Walz, the Minnesota Legislature, The Federal Reserve Bank of Minneapolis and lenders to adopt the Small Business Borrowers’ Bill of Rights. During the current coronavirus crisis many businesses will face severe financial stress and be susceptible to predatory lending.
“There is an increase in predatory lending especially targeting minority and immigrant communities” said Patrick Pariseau of the Metropolitan Economic Development Association (MEDA).
“A group of community lenders and the City of Saint Paul, have been working hard over several months to free a female immigrant business owner in Little Africa from the snares of a predatory lender who is charging her over 200 percent in interest and fees,” said Gene Gelgelu of African Economic Development Solutions.
“While protection of consumer lenders has increased in recent years this has not been the case for small business lending.,” said Dr. Bruce Corrie, economist and professor at Concordia University. “Predatory lending is as insidious as the coronavirus and I am afraid as many small businesses struggle to make payments they will turn to predatory lenders and lose everything.”
To educate borrowers and draw attention to the issue of predatory business lending, the national Responsible Lending Business Coalition (RBLC) created the Small Borrowers’ Bill of Rights, outlining “the six fundamental rights that all small business owners seeking financing deserve and how lenders, brokers, and lead generators should uphold and protect these rights.” The RBLC is led by a cross-sector group of lenders, investors, and advocates, including Accion Opportunity Fund, the Aspen Institute, Community Investment Management, Funding Circle, LendingClub, Opportunity Finance Network, Opportunity Fund, Small Business Majority, and StreetShares. To date, more than 110 lenders and advocates have signed on to the Rights nationwide.
A number of local lenders have adopted the Small Business Borrowers’ Bill of Rights and include, MEDA, AEDS, Hmong American Partnership (HAP), Metropolitan Consortium for Community Development (MCCD), Neighborhood Development Center (NDC), African Development Center (ADC) and Hmong American Partnership (HAP). A coalition of local stakeholders are encouraging state and local officials to pass resolutions in support of the Small Business Borrowers’ Bill of Rights, to promote responsible lending to Minnesota small businesses. Congressman Dean Phillips (D-MN-03) introduced a federal resolution in support of the Rights in 2019, along with Congressman William Timmons (R-SC-04) and House Small Business Committee Chairwoman Nydia Velazquez (D-NY-07).
The Land Use and Economic Development Committee of Union Park District Council (UPDC) in Saint Paul will discuss the resolution in its next meeting.
1. The Right to Transparent Pricing and Terms: A borrower has the right to have the cost and terms of any financing being offered presented to them in writing and in a form that is clear, complete, and easy to compare with other financing options, so they can make the best decision for their business. 2. The Right to Non-Abusive Products: A borrower has the right to expect that the financing products offered by a lender will not trap his/her business in an expensive cycle of re-borrowing.
3. The Right to Responsible Underwriting: A borrower has the right to expect a lender is offering financing based on underwriting practices that assess the ability of the borrower’s business to succeed and repay.
4. The Right to Fair Treatment from Brokers: A borrower has the right to honest, transparent, and impartial communications with a broker regarding loan options, conflicts of interest, fees, and the financing options available.
5. The Right to Inclusive Credit Access: A borrower has the right to fair and equal treatment when seeking a loan including protections guaranteed under the Equal Credit Opportunity Act. 6. The Right to Fair Collections Practices: A borrower has the right to be treated fairly and respectfully throughout a collections process and the right to protections like those guaranteed under the Fair Debt Collection Practices Act.
For more information please contact Dr. Bruce Corrie at firstname.lastname@example.org or 612 321 8263
OneMN.org Statement on Increase in Predatory Small/Minority Business Lending
For immediate release: September 24, 2019
Contact: Brett Buckner, email@example.com
We are concerned about recent cases of predatory lending aimed at minority and small business owners. The tactic of these predatory lenders is to shift focus from consumer loans where there are greater protections to business loans where there is less protection. We call on elected and policy leaders to implement strategies to protect small and minority businesses from predatory lending.
Predatory lending to small businesses, especially minority owned businesses could be the “next credit crisis” Governing Magazine reported in a 2015 article (https://bit.ly/2mSIXoL). Currently in both the US House and Senate there are bills aimed at small business predatory lending (Small Business Fair Lending Act).
“We are seeing minority businesses straddled with loans with unrealistic interest rates,” said Patrick Pariseau, Director, Financial Solutions for MEDA an organization focused on minority business development in Minnesota.
Community members are concerned about a prominent business in Little Africa in Saint Paul that is saddled with a loan with payments over 100 percent of the loan amount on a short term loan and being threatened with foreclosure. “It is very unfortunate a core anchor business in Little Africa is under such great financial stress with a risk of losing their business,” said Gene Gelgelu, President of AEDS and the visionary behind Little Africa, a strategy to create wealth in low income diverse communities.
“This is a classic case from the predatory loan playbook -business desperately needing a loan enters into a short term loan with high origination fees, interest rates and default payments, incomplete loan payout information without details separating interest rates, fees and other payments, aggressive pressure tactics with the ultimate notice for foreclosure, “ said Dr. Bruce Corrie an economist. “I am a resident of Saint Paul for over 30 years and I am very clear – Not in My City.”
OneMN.org requests elected and policy leaders to:
Introduce/support legislation at the national, state and local level protecting small business owners from predatory lending by setting a cap on interest and fees to a reasonable level.
Specify “transparency” in loan agreements during loan origination as well as when requested by a borrower that breaks down payoff amount into interest, fees and other payments
Eliminate “confessions of judgement” and other ways that take away borrower’s rights
Increase education of small business owners on the dangers of predatory lending
Increase the pool of capital for small and minority owned businesses
Increase the availability of low cost/pro bono technical assistance, especially legal review of contract documents
Establish a small and minority business protection unit in the Attorney General’s office and the Department of Commerce, and make it more easily accessible to the community.
A Call to Minnesota Elected, Business and Community Leaders to visibly and strongly affirm Minnesota’s Core identity as Open, Welcoming and Safe. November 16, 2016,
Governor Mark Dayton Speaker Kurt Daudt Majority Leader-elect Paul Gazelka Majority Leader-elect Joyce Peppin Minority Leader-elect Tom Bakk Minority Leader-elect Melissa Hortman Greetings and congratulations to the newly elected leaders, All across Minnesota there is a heightened state of anxiety and fear within the ALANA (African, African American, Latino, Asian, and Native American) communities, LGBTQ community, minority religious groups and Minnesotans in general. This is greatly affecting our children, especially young women and girls. Unfortunately since the election, there has been a significant increase in incidents committed by a small number within our schools, places of work and in the public which have sought to divide us as a community and make some of us feel unwelcome and safe. When trust and respect is lost, our society could collapse. We must work to change the environment very soon. In this context, we call on our elected, business and community leaders, led by Governor Dayton, and our legislative leaders in partnership with business, religious and community organizations to provide a very visible and joint message to Minnesotans that they are committed to keeping Minnesota open, welcoming and safe with great intent and urgency towards shared prosperity and common respect for all Minnesotans. The undersigned organizations call for your leadership to visibly and strongly affirm Minnesota’s Core identity as Open, Welcoming and Safe and are ready to stand with them to achieve respect and prosperity for all Minnesotans. OneMN.org Advocates for Human Rights Acctech LLC African American Leadership Forum (AALF) African Immigrant Services (AIS) African Reconciliation and Development Organization (ARDO) Anika Foundation Al-Amal School American Indian Community Housing Organization Council on American Islamic Relations (CAIR) Chai.News Coalition of Asian American Leaders (CAAL) Comunidades Latinas Unidas En Servicio (Latino Communities United In Service - CLUES) Common Cause - Minnesota Confederation of Somali Community in Minnesota (CSM-MN) Corridor Design Hmong Chamber of Commerce Immigration Law Center of Minnesota India Association of Minnesota Indian American Muslim Council (IAMC) MN Chapter Isimetrics Islamic Cultural Community Center Islamic Center of Minnesota Isuroon Jewish Community Action (JCA) Oromo Chamber of Commerce Lao Assistance Center Latino Chamber of Commerce of MN Latino LEAD Masjid Al Kareem MetroIBA Minnesota Black Chamber of Commerce Minnesota Chamber of Commerce Minnesota Indian Business Alliance Muslim American Society of Minnesota Muslim Health Professionals of Minnesota Northwest Indian Community Development Center Northwest Islamic Community Center St. Paul Chamber of Commerce Phyllis Weatley Community Center The Muslim Health Professionals of Minnesota ZACAH (Zakat, Aid & Charity Assisting Humanity)
We need to regroup, reaffirm our core values and work together to continue to build ONE Minnesota. Thank you for your time and consideration in this critical moment. firstname.lastname@example.org