Small businesses need loan transparency

As Illinois legislators, one of the most heartbreaking parts of our job is to hear constituents tell us about ways the system has let them down. Some of the most harrowing stories have come from people who’ve been victims of predatory financial practices. That’s why in 2021, the legislature passed laws to address predatory practices by consumer lenders and to require financial institutions, including mortgage companies, to invest in the communities in which they do business.

This was a victory for Illinois consumers — made possible by a rare show of legislative unity following the death of George Floyd and other tragedies that shined a light on racial inequities in our state and nation.

However, the package of laws passed that year were not as meaningful for small businesses. Lenders to small businesses today are not even required to disclose the Annual Percentage Rate (APR) of their loans and instead use confusing “factor rates” or “specified percentages” that obscure the APR, which can be over 350%.

If you’ve ever seen a car commercial or obtained a mortgage, you’ve encountered APR. That’s because APR is the gold standard and has been the legally required metric to enable consumers to make apples-to-apples comparisons between consumer loans since the 1960s. Now it’s time that Illinois extends that same transparency to small businesses.

That’s why we’re fighting in Springfield to pass APRforAll — legislation that would close this loophole and require all lenders to disclose the true cost of their loans to small businesses.

If you’re a small-business owner who’s had a bad experience taking out a loan over the internet, we want to hear from you. Your story can help us show the human cost of games these lenders play to keep small businesses in the dark. It’s time Illinois pass APR for All.

State Rep. Mary Beth Canty, Arlington Heights

State Sen. Christopher Belt, Swansea