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Sen. Ben Kramer presses APR disclosure for small-business fintech loans, cites California and New York precedents
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Summary
Sen. Ben Kramer told the Economic Matters Committee SB 881 would require fintech lenders to disclose APRs for certain small-business revenue-based loans, arguing the bill is modeled on successful California and New York laws and focuses on transparency rather than caps; committee members raised technical and regional-competitiveness questions and asked about criminal penalties and exemptions.
Sen. Ben Kramer introduced Senate Bill 881 as legislation to improve transparency for small-business fintech lending by requiring clear APR disclosure for certain commercial financing products. "This bill is simply about transparency... Make clear the APR," Kramer said, urging the committee to protect small "mom and pop" businesses from what he described as predatory interest rates of "200, 300, 400%."
Kramer framed SB 881 as a variant of laws already implemented in California and New York and said courts upholding those laws show the approach is legally sound. He said the bill previously included an interest-rate cap that was later removed, and that the present proposal focuses on mandatory APR disclosures and related consumer protections. Kramer also cited an industry advertisement from Rapid Finance showing vendors already market software that can compute APRs, arguing the technology obstacle is surmountable.
Committee members raised operational and policy questions: one member noted the amended bill spans dozens of pages after incorporating existing Office of Financial Regulation frameworks, asking whether the length is necessary; another asked about regional competitiveness and whether neighboring states have comparable rules; a member asked whether certain manufacturers with subsidiaries would be exempted and whether criminal penalties in the bill (a $5,000 fine and a maximum three-year imprisonment referenced in committee discussion) were intended to apply per transaction. Kramer said he was open to removing criminal sanctions and emphasized the bill's primary goal is disclosure and consumer choice.
The committee spent extensive time on technical issues, including whether APR is practicable for sales-based financing and whether disclosures should specify exact formulas or ranges; Kramer said the bill provides formulas and leeway modeled on California and New York. Delegate Howard and other members supported the bill, saying states that enacted similar laws did not suffer industry flight. The hearing closed without a committee vote.
