I 

114TH CONGRESS 

2D SESSION H. R. 5156 

To amend the Truth in Lending Act to provide coverage under such Act 

for credit cards issued to small businesses, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 29, 2016 

Mrs. LOWEY introduced the following bill; which was referred to the 

Committee on Financial Services 

A BILL 

To amend the Truth in Lending Act to provide coverage 

under such Act for credit cards issued to small businesses, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE; FINDINGS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Small Business Credit Card Act of 2016’’. 

6 (b) FINDINGS.—The Congress finds as follows: 

7 (1) Economic growth has frequently been led by 

8 the creation of millions of new, small businesses. 

9 (2) Today, small business owners are severely 

10 limited in their ability to finance new business venVerDate Sep 11 2014 21:10 May 11, 2016 Jkt 059200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H5156.IH H5156

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1 tures because access to capital through traditional 

2 resources has been restricted. 

3 (3) Small businesses are being pushed into 

4 using credit cards to meet capital needs. 

5 (4) This use of credit cards is especially true 

6 for innovative and rapidly growing businesses which 

7 lack the assets necessary for a traditional loan. 

8 (5) In 2012, 31 percent of the small businesses 

9 surveyed used credit cards to meet their capital 

10 needs. 

11 (6) In 1993, only 16 percent of small busi12 nesses used credit cards as a source of financing. 

13 (7) One-half of small businesses using a credit 

14 card carry a monthly balance, and one-quarter of 

15 small businesses carry a monthly balance in excess 

16 of $10,000. 

17 (8) The average interest rate charged on small 

18 business credit cards is 15.6 percent. 

19 (9) Nearly one-half of small businesses with 

20 credit cards have reported a worsening of terms, in21 cluding increased interest rates, fees, and payment 

22 procedures, making it more difficult to expand oper23 ations or grow business. 


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1 (10) Small business credit cards contracts do 

2 not include consumer protections provided to individ3 uals under the CARD Act. 

4 SEC. 2. EXTENDING CREDIT CARD PROTECTIONS UNDER 

5 THE TRUTH IN LENDING ACT TO SMALL BUSI6 NESSES. 

7 (a) DEFINITION OF CONSUMER.—Section 103(i) of 

8 the Truth in Lending Act (15 U.S.C. 1602(i)) is amend9 ed— 

10 (1) by striking ‘‘The adjective ‘consumer’, used 

11 with reference to a credit transaction, characterizes 

12 the transaction as one in which the party to whom 

13 credit is offered or extended is’’ and inserting ‘‘CON14 SUMER.— 

15 ‘‘(1) IN GENERAL.—Except as provided in para16 graph (2), the term ‘consumer’, when used as an ad17 jective to describe or modify a credit transaction or 

18 credit plan, means a transaction or credit plan under 

19 which credit is offered or extended to’’; and 

20 (2) by adding at the end the following new 

21 paragraph: 

22 ‘‘(2) SMALL BUSINESS INCLUDED UNDER CER23 TAIN CIRCUMSTANCES.— 

24 ‘‘(A) IN GENERAL.—For purposes of any 

25 provision of this title relating to a credit card 


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1 account under an open end credit plan, the 

2 term ‘consumer’ includes any qualified small 

3 business. 

4 ‘‘(B) QUALIFIED SMALL BUSINESS.—For 

5 purposes of subparagraph (A), the term ‘quali6 fied small business’ means, with respect to any 

7 credit card account under an open end credit 

8 plan, any business concern having 50 or fewer 

9 employees, whether or not— 

10 ‘‘(i) the credit card account is in the 

11 name of an individual or a business entity; 

12 and 

13 ‘‘(ii) any credit transaction involving 

14 such account is for business or personal 

15 purposes. 

16 ‘‘(C) EXCLUSION OF SMALL BUSINESS

17 AFTER ‘OPT OUT’ EFFECTIVE DATE.—The term 

18 ‘qualified small business’ shall not include any 

19 business concern described in subparagraph (A) 

20 after the effective date of any election under 

21 section 135(b) by the individual or business for 

22 which the credit card account referred to in 

23 such subparagraph has been established, so 

24 long as such election remains in effect.’’. 


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1 (b) AMENDMENTS TO EXEMPTIONS.—Section 104(1) 

2 of the Truth in Lending Act (15 U.S.C. 1603(1)) is 

3 amended— 

4 (1) by inserting ‘‘other than a credit trans5 action under an open end consumer credit plan in 

6 which the consumer is a qualified small business’’ 

7 after ‘‘agricultural purposes’’; and 

8 (2) by inserting ‘‘other than qualified small 

9 businesses’’ after ‘‘organizations’’. 

10 (c) BUSINESS CREDIT CARD AMENDMENTS.—Sec11 tion 135 of the Truth in Lending Act (15 U.S.C. 1645) 

12 is amended— 

13 (1) by striking ‘‘The exemption provided by’’ 

14 and inserting ‘‘(a) IN GENERAL.—The exemption 

15 provided by’’; and 

16 (2) by adding at the end the following new sub17 section: 

18 ‘‘(b) QUALIFIED SMALL BUSINESS OPT OUT FROM

19 COVERAGE.— 

20 ‘‘(1) NOTICE OF COVERAGE.—The disclosures 

21 under section 127(a) before opening a credit card 

22 account under an open end credit plan for a quali23 fied small business shall include a clear and con24 spicuous disclosure— 


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1 ‘‘(A) that the qualified small business is 

2 treated as a consumer under this title and is 

3 subject to the requirements of this title as a 

4 consumer; 

5 ‘‘(B) that the business may elect, in ac6 cordance with this subsection, to be exempt, 

7 under section 104(1), from this title to the 

8 same extent as any business other than a quali9 fied small business; and 

10 ‘‘(C) of the procedures for making the elec11 tion and for subsequently revoking any such 

12 election. 

13 ‘‘(2) ELECTION.—The Board shall prescribe 

14 procedures for making an effective election under 

15 this subsection and for revoking any such election. 

16 ‘‘(3) PROHIBITION ON DISCRIMINATION

17 AGAINST QUALIFIED SMALL BUSINESS.—No creditor 

18 may— 

19 ‘‘(A) discriminate against any business 

20 concern having 50 or fewer employees in con21 nection with any credit card account of, or any 

22 application for a credit card account by such 

23 business, under an open end credit plan on any 

24 basis; or 


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1 ‘‘(B) require any qualified small business 

2 to make an election under this subsection as a 

3 condition for opening a credit card account, or 

4 for providing more advantageous terms for any 

5 credit card account, under an open end credit 

6 plan.’’. 

Æ 


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