House Small Biz Committee Examines Financing Role of Credit Cards The U.S. House Committee on Small Business held an April 3 hearing on the role of credit cards in small-business financing. The hearing featured a small-business owner, two professors of business, and representatives from the National Association of Federal Credit Unions (NAFCU) and Independent Community Bankers of America (ICBA). All of the witnesses spoke to small businesses’ growing reliance on credit-card financing. The hearing only briefly touched on the various legislative proposals introduced in the last year that would curtail the more egregious practices of the credit-card industry. The representatives of NAFCU and ICBA expressed their opposition to increased regulation of the credit-card industry, but both also conceded that they were aware that some predatory practices were being perpetrated on the public—although not by the groups they represented. One of the business professors called some of the industry’s practices, “legalized loan sharking.” During the hearing’s question-and-answer period, the ICBA and NAFCU representatives emphasized that community banks and credit unions would like more access to the Small Business Administration’s (SBA) lending programs, but stressed that the actions of the SBA made this goal difficult to achieve, noting the agency’s increased fees and abundant red tape. They also stressed that the SBA’s outreach was woefully inadequate, saying the agency simply was not “out there.” When asked what they would recommend to make the SBA more effective for small businesses, both highlighted the need to reduce fees and streamline the SBA process for lenders. Asked, “What is the easiest way to expand capital to small businesses beyond the reliance on credit cards? Is there a way to extend credit-card-like financing through a means other than credit cards?” Both reiterated: Streamline the SBA process. Please click here to review NSBA’s Credit-Card Reform Issue Brief. |