Alternative small business lenders seem to be preparing for a regulatory storm – or, at least, for increased communication with policymakers.
Another SME financing advocacy group has been formed, this time by OnDeck, Kabbage and CAN Capital.
The firms announced the creation of the Innovative Lending Platform Association on Thursday (May 5), citing advocacy, education and the development of best practices as their goals.
First on the agenda is the creation of a model small business lending disclosure. Dubbed SMART (Straightforward Metrics Around Rate and Total Cost) Box, the initiative will see participation from the Association for Enterprise Opportunity and provide SMEs with a chart of explanations and comparison tools when they shop around for a small business loan.
The Innovation Lending Platform Association is opening up the floor to industry stakeholders to participate in the creation of the SMART Box, reports said, and this June it will launch an engagement period to seek feedback on the results. The group said it hopes to engage policymakers, nonprofits and trade associations in the process.
“As our industry rapidly evolves, we believe it is critical to provide the tools and transparency businesses need to make informed borrowing decisions,” said Kabbage co-founder and COO Kathryn Petralia in a statement.
In another statement, CAN Capital CEO Daniel DeMeo said his company believes “that the key to the success of our industry rests on the success of the small businesses we serve.”
“This means providing clear disclosures on pricing, ensuring products are represented accurately and providing the highest level of customer service,” he continued.
Last month saw the launch of the Coalition for Responsible Business Finance, led by former SBA Chief Counsel for Advocacy Tom Sullivan. The group, too, focuses on enhancing transparency in the SME lending process. Last year, alternative SME finance platforms partnered to establish the Small Business Borrowers’ Bill of Rights, a voluntary code of conduct similarly aimed at transparency in pricing.