Business lending is fundamentally different from consumer lending, and regulations should not treat them similarly, a bipartisan group of 20 House members told Treasury Secretary Jack Lew in a letter yesterday. Led by Reps. Randy Neugebauer (R-Texas) and Lacy Clay (D-Mo.), the lawmakers cautioned the Treasury Department not to make any recommendations that would stifle small business credit.
“Most notably, small business entrepreneurs frequently access credit in order to fuel growth and expansion opportunities, many of which are short-term in nature, and therefore the types of credit they require and the characteristics of that credit may differ from that traditionally used by a consumer to buy a house or car,” they said. “Mistaken efforts to conflate these categories would restrict the availability of capital to small business owners.”
The House members cited “recent comments by public officials that seem to indicate a preference to regulate lending to small businesses and consumers similarly” and warned that “hastily drawn conclusions in this regard would do a great disservice to American small business owners.”
The letter came in the context of a request for information on the growth of online marketplace lending by the Treasury, which is expected to release its findings next week. Noting the growth of marketplace lenders providing small business credit, the lawmakers pointed out that many depository institutions are partnering creatively with nonbank lenders and added that Treasury should “encourage the evolution of this market without dampening or delaying innovation.”