New York State Senator Kevin Thomas, a Democrat from Levittown and acting chairman of the Senate Committee on Consumer Protection, is advancing legislation to assist small businesses and strengthen consumer protections amid the coronavirus pandemic.
Businesses like Borrelli’s Italian Restaurant in East Meadow have suffered great losses during the coronavirus pandemic and went to great lengths to reopen under new guidelines. Borrelli’s converted part of its parking lot into an outdoor dining area, allowing the eatery to seat 80 people inside and 40 outside under Gov. Andrew Cuomo’s coronavirus guidelines.
As the coronavirus has proliferated worldwide, so too have unscrupulous online lenders seeking to take advantage of the crisis at the expense of small businesses, Thomas said in a statement.
Credit extended for a business or commercial purpose is not covered by the disclosure requirements of the federal Truth in Lending Act, making it difficult for businesses to obtain key financing terms in any standard format, he continued.
Studies from the U.S. Federal Reserve show that online lenders vary significantly in the quality of information that they provide, especially related to costs, allowing some lenders to overcharge or to engage in predatory lending practices that hurt small businesses.
As small businesses begin to reopen their doors, they should have access to the necessary information to make informed, financially-responsible decisions, Thomas said.
He is sponsoring new legislation that would require providers to disclose certain information to borrowers, such as the cost of financing. Such disclosure aims to protect small businesses in their dealings with lenders and creditors. It will also allow borrowers to compare the pricing and costs of a commercial financing across several providers, ensuring that they are able to choose the best possible option for their business. The legislation is currently on the Senate floor calendar.