What Is the Small Business Borrower’s Bill Of Rights ?
CAMEO Launches Campaign to Educate California’s Small Business Leaders and Electeds
on What Good Small Business Lending Looks Like
San Francisco, CA – Small businesses have trouble accessing capital to grow their businesses. Traditional banks don’t loan under $250,000 anymore. The biggest online lending segment for small business loans aren’t loans at all, they’re Merchant Cash Advances (MCA). MCAs outweigh other lending by a factor of six. Often MCAs are high-cost and short-term and can easily put a small business into bankruptcy.
“Banks decline 8,000 small business loans daily,” said Claudia Viek, CEO of CAMEO. “Who is filling the gap? Easy, fast money from online lenders. But that money is often too good to be true and can really damage a business.”
Many times merchant cash advances disguise the interest rate with fees, confusing terms, and come with pre-payment penalties. While quick money might be right in some business conditions, many small businesses get stuck in debt traps, having to borrow money just to make payments on their advances. And as merchant cash advance companies aren’t technically lenders, they are not regulated.
“Small business leaders need to really understand the impact that these loans have on their communities and local economies,” said Viek. “That’s why we’re launching an education campaign on what good capital looks like.”
Today, CAMEO launched an educational campaign to inform small businesses and elected officials in California about the Small Business Borrower’s Bill of Rights.
The Small Business Borrower’s Bill of Rights (BBOR) includes:
• Transparent Pricing and Terms
• Non-Abusive Products
• Responsible Underwriting
• Fair Treatment from Brokers
• Inclusive Credit Access
• Fair Collection Practices
The BBOR was created by the Responsible Business Lending Coalition (Accion, Aspen Institute, Fundera, Funding Circle, Lending Club, Multifunding, Opportunity Fund and Small Business Majority).
“As the voice of California’s very small businesses, it’s our responsibility to let people know about the BBOR,” said Viek. “And to let everyone know that there are good lenders out there that have a business’ best interest at heart, like some of the online lenders in the coalition and Community Development Financial Institutions or CDFIs. They offer what I like to call ‘honest’ capital.”
CDFI’s are community-based lenders whose mission it is to connect businesses with affordable capital that will help their businesses grow and serve the community.
Resource: list of CDFI’s in California.
CAMEO’s mission is to promote jobs, economic opportunity and community well-being through entrepreneurship training, business coaching and microfinance. CAMEO is California’s statewide microbusiness network made up of over 170 organizations, agencies and individuals dedicated to furthering the fortunes of micro-businesses in California.
Annually, CAMEO members serve about 18,000 very small businesses with training, business and credit assistance and loans. These firms – largely start-ups with less than five employees – support or create 30,000 new jobs in California. And generate a total of $1.3 billion in economic activity. microbiz.org.