TRENTON – In an effort to ensure transparency in lending and protect small business owners from potential exploitation, the Senate Commerce Committee advanced legislation sponsored by Senator Troy Singleton that would expand disclosure requirements for financial products to small business owners that are less than $500,000.

“Access to financing is often one of the biggest hurdles faced by small business owners, and as the lending market changes to include more and more non-bank online providers the potential for exploitation due to a lack of transparency has increased,” said Senator Singleton (D-Burlington). “This legislation will extend the kinds of disclosure requirements already required for many other types of loans, so that owners of small businesses have a clear idea of what they are signing up for before agreeing to a loan.”

The bill, S-1397, would require commercial lenders to provide standardized disclosures on the terms and conditions of their financial products to small business owners for products that are less than $500,000. The bill’s expanded disclosure requirements would apply to the person who extends a specific offer of commercial financing to a recipient, including persons who solicit and present specific offers on behalf of a third party.

Providers or brokers that violate provisions of the bill would be liable to a civil penalty of not more than $2,000 for each violation, or not more than $10,000 for each willful violation. In addition, if it is found by the Department of Banking and Insurance Commissioner that a provider or broker knowingly violated the requirements of the bill, the Commissioner may order additional relief, including but not limited to a permanent or preliminary injunction.

S-1397 was advanced in a 3-0 vote, with 2 abstentions.

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