One of the chief ways small business owners raise money is through loans.<\/p>\n
One of the chief complaints of small business owners is regulations.<\/p>\n
The two issues have hit in a head-on collision.<\/p>\n
The Consumer Financial Protection Bureau (CFPB) was set up to protect people from falling for scams in the financial industry, and to keep a watch on companies that operate in the space. It has been so mired in controversy over its authority that it now faces dismantling by the new administration.<\/p>\n
As the wheels turn in that effort, the controversial government agency has set its sights on small business loans, collecting information and statistics about the loans.<\/p>\n
Banks and lenders smell trouble, according to Bloomberg BNA. Is the bureau ramping up for a new round of fair lending lawsuits? Or a whole new range of lending regulations? If it wanted to, the unelected CFPB could enact regulations with the force of law, just as if it were Congress.<\/p>\n
The CFPB came from the Dodd-Frank Act that has been in the news lately, as calls for its repeal have run rampant.<\/p>\n
The problem with the CFPB’s targeting how small businesses get loans is twofold.<\/p>\n
First, there are concerns about the scope of the information the CFPB wants to collect.<\/p>\n
The CFPB wants to use a section of an existing law that requires it to collect information about access to credit for small businesses, women-owned businesses, and minority-owned businesses. The CFPB also wants to collect new data on the state of small business lending. It applies to online lenders, as well as bank lenders.<\/p>\n
Proponents say this is an effort to save small business owners from unfair lending practices. However, a Pandora’s box is opened whenever a government bureaucracy attempts to expand its so-called collection data efforts.<\/p>\n
Lenders, including non-banks and online lenders, could simply curtail making loans to small business owners. They might fear unequal lending lawsuits if their numbers of loans to women-owned and minority-owned businesses are not high enough. Some might make bad loans just to get their numbers up, something that contributed to the housing crisis of 2008.<\/p>\n
Some companies may find that dealing with government disclosure is timely and costly. They may find it’s not worth the hassle.<\/p>\n
For small business owners, available lenders would be curtailed.<\/p>\n
The second problem deals with the many complaints about the CFPB concerning its abuse of power.<\/p>\n
The controversial bureau has been under fire for its overreach. Critics also say the CFPB’s data collection efforts may go further than what is allowed by the actual law.<\/p>\n","protected":false},"excerpt":{"rendered":"
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