Preventing Usury Financial Practices

…that will lead to structural debt,  bankruptcy and consolidation of markets.  Expand financial opportunities for small businesses to restructure.

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Policies to support small business finances

  • Prohibit predatory lending:  Small business owners need strengthened protections to prohibit high cost loans during the crisis. Banks have access to financing at extraordinarily low rates but there are no limits on high-cost and predatory loans to small businesses. Interest rates on any new credit extended to small businesses during the emergency should be capped to prevent profiteering by predatory lenders. Personal guarantees for loans should be banned.

  • Protection from debt collection harassment and usury practices.  All new and existing garnishments and repossession should be stopped, and banks should suspend any garnishments already in place. No debt should be sold, and no additional interest or fees should be applied on such debts.

  • Bankruptcy.  When bankruptcy is unavoidable, we need to ensure small businesses have all the support they need to restructure versus liquidating.  New bankruptcy rules exist for small business in the The Small Business Reorganization Act that was passed last year and was expanded in the CARES Act.  We need additional outreach and education for small businesses about this option.  Increased bankruptcy court funding and authorizing additional temporary bankruptcy judges is needed to help clear clogged dockets so that small business is not steered towards liquidation as has happened in previous recessions. 

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“New data suggests that 43% of small businesses in the U.S. could shutter permanently in the next six months, according to a poll by the U.S. Chamber of Commerce. It's what Amanda Ballantyne, executive director of Main Street Alliance, an advocacy group for small business, told The New York Times was "a crisis that will impact our economy for generations. We’re going to lose so much of the small-business sector."

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