U.S. federal officials may still be in the early stages of assessing the nation’s alternative lending and small business finance sector, an effort that may eventually lead to regulation of an industry that has yet to face significant crackdowns. But some players are taking matters into their own hands with the formation of a new group to promote responsible SME lending practices, on both the borrower and lender sides.
An announcement made Friday (April 1) said the Coalition for Responsible Business Finance (CRBF) is now in operation, led by former Small Business Administration Chief Counsel for Advocacy Tom Sullivan.
The CRBF said it will look to advocate for the FinTech industry, collaborating with federal and state policymakers to educate and discuss the development of the small business lending sector, especially in the context of disruptive innovation.
Its most immediate plan will be the creation of the “Standards of Excellence,” a set of best practices for small business lending.
The announcement also revealed Breakout Capital, a small business lender, as a new committee member for the group.
“We are excited to be part of CRBF’s efforts to develop best practices which reflect the views of both responsible lenders and responsible small business borrowers,” said Breakout Capital Founder and CEO Carl Fairbank in a statement.
“We believe our initiative will raise industry standards and help Congress and regulators develop a better understanding of nontraditional small business finance,” the executive continued.
According to the announcement, the group will also look to work with small business borrowers on what they should expect from the alternative lending sector.
The CRBF is not the U.S.’s first advocacy group targeting the alternative SME finance industry; last year, a group of alt-lenders established the Small Business Borrowers’ Bill of Rights, a code of ethics for these companies to follow.
The voluntary code includes the right to transparent pricing, fair treatment from brokers and inclusive access to credit.