I 
117TH CONGRESS 
1ST SESSION H. R. 6054 
To apply the Truth in Lending Act to small business financing, and for 
other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
NOVEMBER 18, 2021 
Ms. VELA´ZQUEZ (for herself, Mr. PERLMUTTER, and Ms. WATERS) introduced 
the following bill; which was referred to the Committee on Financial Services 
A BILL 
To apply the Truth in Lending Act to small business 
financing, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Small Business Lend-
ing Disclosure Act of 2021’’. 
SEC. 2. APPLICATION OF THE TRUTH IN LENDING TO 
SMALL BUSINESS FINANCING. 
(a) IN GENERAL.—The Truth in Lending Act (15 
U.S.C. 1601 et seq.) is amended by adding at the end 
the following: 
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‘‘CHAPTER 6—SMALL BUSINESS 
FINANCING 
‘‘191. Definitions. 
‘‘192. Application of this title to small business financing. 
‘‘193. Additional disclosures. 
‘‘194. Restrictions on double-dipping. 
‘‘195. Additional provisions. 
‘‘§ 191. Definitions 
‘‘In this chapter: 
‘‘(1) CLOSED-END COMMERCIAL CREDIT.—The 
term ‘closed-end commercial credit’— 
‘‘(A) means a closed-end extension of cred-
it, secured or unsecured, including financing 
with an established principal amount and in-
cluding equipment financing that does not meet 
the definition of a lease under the Uniform 
Commercial Code (U.C.C.—§ 2A–103(j)) the 
proceeds of which the recipient does not intend 
to use primarily for personal, family or house-
hold purposes; and 
‘‘(B) includes financing with an established 
principal amount and duration. 
‘‘(2) CONSUMER FINANCIAL PRODUCT OR SERV-
ICE.—The term ‘consumer financial product or serv-
ice’ has the meaning given that term under section 
1002 of the Consumer Financial Protection Act of 
2010. 
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‘‘(3) DIRECTOR.—The term ‘Director’ means 
the Director of the Bureau. 
‘‘(4) FACTORING.—The term ‘factoring’ means 
a transaction that includes an agreement to pur-
chase, transfer, or sell a legally enforceable claim for 
payment held by a recipient for goods the recipient 
has supplied or services the recipient has rendered 
that have been ordered but for which payment has 
not yet been made. 
‘‘(5) FINANCE CHARGE.— 
‘‘(A) IN
GENERAL.—The term ‘finance 
charge’ means the cost of financing as a dollar 
amount, and includes any charge payable di-
rectly or indirectly by the recipient of the fi-
nancing and imposed directly or indirectly by 
the provider of the financing as an incident to 
or a condition of the extension of financing. 
‘‘(B) CALCULATION
IN
OPEN-END
COM-
MERCIAL
CREDIT
PLANS.—In any open-end 
commercial credit plan, the finance charge shall 
be computed assuming the maximum amount of 
credit available to the recipient, in each case, is 
drawn and repaid at the minimum rate. 
‘‘(C) CALCULATION IN FACTORING TRANS-
ACTIONS.—In any factoring transaction, the fi-
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ing the provider requires the recipient to 
pay off the balance of an existing loan or 
advance from the same provider, any pre-
payment charge or penalty required to be 
paid on the existing financing shall be in-
cluded as a financing charge. 
‘‘(ii) TREATMENT WHEN REPAYMENT 
AMOUNT
IS
CALCULATED
AS
A
FIXED 
AMOUNT.—For purposes of clause (i), for 
financing for which the total repayment 
amount is calculated as a fixed amount, 
the prepayment charge is equal to the 
original finance charge multiplied by the 
required prepayment amount as a percent-
age of the total repayment amount, minus 
any portion of the total repayment amount 
forgiven by the provider at the time of pre-
payment. 
‘‘(6) OPEN-END COMMERCIAL CREDIT PLAN.— 
The term ‘open-end commercial credit plan’ means 
any small business financing provided by a person 
under a plan in which the person reasonably con-
templates repeat transactions, which prescribes the 
terms of such transactions, and which provides for 
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a finance charge which may be computed from time 
to time on the outstanding unpaid balance. 
‘‘(7) PROVIDER.—The term ‘provider’ mean a 
person who offers or provides small business financ-
ing. 
‘‘(8) RECIPIENT.—The term ‘recipient’ means a 
person who is presented an offer of small business 
financing. 
‘‘(9) 
SALES-BASED
FINANCING.—The 
term 
‘sales-based financing’— 
‘‘(A) means a transaction where there is 
an extension of financing to a recipient that is 
repaid by the recipient, over time, as a percent-
age of sales or revenue, in which the payment 
amount may increase or decrease according to 
the volume of sales made or revenue received by 
the recipient; and 
‘‘(B) includes transactions with a ‘true-up 
mechanism’. 
‘‘(10) SMALL BUSINESS.—The term ‘small busi-
ness’ has the meaning given the term ‘small-business 
concern’ under section 3 of the Small Business Act 
(15 U.S.C. 632). 
‘‘(11) SMALL BUSINESS FINANCING.—The term 
‘small business financing’— 
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‘‘(A) means any line of credit, closed-end 
commercial credit, sales-based financing, or 
other non-equity obligation or alleged obligation 
of a partnership, corporation, cooperative, asso-
ciation, sole proprietorship, or other entity that 
is $2,500,000 or less; and 
‘‘(B) does not include any obligation or al-
leged obligation of an individual that is pri-
marily for personal, family, or household pur-
poses. 
‘‘(12) SPECIFIC
OFFER.—The term ‘specific 
offer’ means the specific terms of small business fi-
nancing, including price or amount, that is quoted to 
a recipient, based on information obtained from, or 
about the recipient, which, if accepted by a recipient, 
shall be binding on the provider, as applicable, sub-
ject to any specific requirements stated in such 
terms. 
‘‘§ 192. Application of this title to small business fi-
nancing 
‘‘(a) IN GENERAL.—This title shall apply to small 
business financing made to a small business to the same 
extent as this title applies to extensions of credit made 
to a consumer. 
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‘‘(b) RULEMAKING.—The Director shall issue such 
rules as may be required to carry out this chapter. 
‘‘(c) BUREAU AUTHORITY.—For purposes of carrying 
out this chapter and other Federal laws, including the 
Consumer Financial Protection Act of 2010, the Bureau 
shall have the same authority with respect to small busi-
ness financing as the Bureau has with respect to consumer 
financial products and services. 
‘‘§ 193. Additional disclosures 
‘‘(a) IN GENERAL.—Any provider offering small busi-
ness financing to a small business shall disclose the fol-
lowing pieces of information to a recipient at the time of 
extending a specific offer for small business financing: 
‘‘(1) FINANCING AMOUNT.—The total amount 
to be paid to the small business, taking into account 
all fees and charges to be withheld at disbursement. 
‘‘(2) ANNUAL PERCENTAGE RATE.— 
‘‘(A) CLOSED-END COMMERCIAL CREDIT.— 
With respect to closed-end commercial credit, 
the annual percentage rate, using only the 
words ‘annual percentage rate’ or the abbrevia-
tion ‘APR’, expressed as a yearly rate, inclusive 
of any fees and finance charges that cannot be 
avoided by a recipient. 
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‘‘(B) 
OPEN-END
COMMERCIAL
CREDIT 
PLANS.—With respect to open-end commercial 
credit plans, the annual percentage rate, using 
only the words ‘annual percentage rate’ or the 
abbreviation ‘APR’, expressed as a nominal 
yearly rate, inclusive of any fees and finance 
charges that cannot be avoided by a recipient, 
based on the maximum amount of credit avail-
able to the recipient and the term resulting 
from making the minimum required payments 
term as disclosed. 
‘‘(C) SALES-BASED FINANCING.— 
‘‘(i) IN
GENERAL.—With respect to 
sales-based financing, the estimated annual 
percentage rate, using the words ‘annual 
percentage rate’ or the abbreviation ‘APR’, 
expressed as a yearly rate, inclusive of any 
fees and finance charges, based on the esti-
mated term of repayment and the pro-
jected periodic payment amounts. 
‘‘(ii) CALCULATION OF CERTAIN PAY-
MENT AMOUNTS.—The estimated term of 
repayment and the projected periodic pay-
ment amounts shall be calculated based on 
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the projection of the recipient’s sales, 
called the projected sales volume. 
‘‘(iii) CALCULATION
OF
PROJECTED 
SALES VOLUMES.—For purposes of clause 
(ii), the projected sales volume may be cal-
culated— 
‘‘(I) according to a method de-
fined by the Director based on the re-
cipient’s historical sales volume over a 
defined period of time that is used for 
all sales-based financing transactions 
by that provider; or 
‘‘(II) by another method defined 
by the provider and approved by the 
Director, with ongoing monitoring by 
the Director for accuracy based on a 
comparison of the annual percentage 
rate as disclosed to the recipient and 
as calculated retrospectively upon re-
payment of the financing. 
‘‘(D) FACTORING.— 
‘‘(i) IN
GENERAL.—With respect to 
factoring, the estimated annual percentage 
rate, using that term. 
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‘‘(ii) CALCULATION.—To calculate the 
estimated annual percentage rate under 
clause (i)— 
‘‘(I) the purchase amount shall 
be considered the financing amount; 
‘‘(II) the purchase amount minus 
the total cost of financing shall be 
considered the payment amount; and 
‘‘(III) the term is established by 
the payment due date of the receiv-
ables. 
‘‘(iii) ALTERNATE METHOD TO ESTI-
MATE
TERM.—Notwithstanding 
clause 
(ii)(III), a provider may estimate the term 
for a factoring transaction as the average 
payment period, its historical data over a 
period not to exceed the previous twelve 
months, concerning payment invoices paid 
by the party owing the accounts receivable 
in question. 
‘‘(3) PAYMENT
AMOUNT.—With respect to 
small business financing other than factoring— 
‘‘(A) for payment amounts that are fixed— 
‘‘(i) the payment amounts and fre-
quency (e.g., daily, weekly, monthly); and 
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‘‘(ii) if the term is longer than one 
month and payment frequency is other 
than monthly, the average total monthly 
payment amount; or 
‘‘(B) for payment amounts that are vari-
able— 
‘‘(i) a full payment schedule or a de-
scription of the method used to calculate 
the amounts and frequency of payments; 
and 
‘‘(ii) if the term is longer than one 
month, the estimated average total month-
ly payment amount. 
‘‘(4) TERM.—For financing other than fac-
toring, the term of the small business financing, ei-
ther in months or in years, or, if the term is not 
fixed, the estimated term, calculated using the same 
assumptions used to calculate the estimated annual 
percentage rate. 
‘‘(5) FINANCE CHARGE.—The finance charge of 
the small business financing, broken down to show 
what expenses and fees are included in the finance 
charge. 
‘‘(6) PREPAYMENT COST OR SAVINGS.—In the 
event that a recipient elects to pay off or refinance 
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the small business financing prior to full repayment, 
the provider must disclose— 
‘‘(A) whether the recipient would be re-
quired to pay any finance charges other than 
interest accrued since the recipient’s last pay-
ment; 
‘‘(B) if the recipient is required to pay the 
finance charges described under subparagraph 
(A), the percentage of any unpaid portion of 
the finance charge and maximum dollar amount 
the recipient could be required to pay; and 
‘‘(C) whether the recipient would be re-
quired to pay any additional fees not already in-
cluded in the finance charge. 
‘‘(7) COLLATERAL
REQUIREMENTS.—Any col-
lateral requirement that will be imposed on the small 
business in connection with the small business fi-
nancing. 
‘‘(b) FORM OF DISCLOSURES.— 
‘‘(1) IN GENERAL.—Disclosures made pursuant 
to this section shall be in writing, at the time a spe-
cific offer is made, and in a manner that is clear, 
conspicuous, complete, and allows the small business 
to compare the range of small business financing op-
tions that the small business may be considering. 
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‘‘(2) PROMINENCE OF DISCLOSURES.—In mak-
ing any disclosure pursuant to this section, the dis-
closures required under paragraphs (1), (2), and (3) 
of subsection (a) shall be displayed most promi-
nently. 
‘‘§ 194. Restrictions on double-dipping 
‘‘When a lender of small business financing refi-
nances or modifies an existing loan with a fixed fee as 
the primary financing charge, the lender may not charge 
a fee on the small business’s outstanding principal unless 
there is a tangible benefit to the small business. 
‘‘§ 195. Additional provisions 
‘‘(a) RULE
OF CONSTRUCTION.—Nothing in this 
chapter may be construed to prevent a provider from pro-
viding or disclosing additional information on a small busi-
ness financing being offered to a recipient, provided how-
ever, that such additional information may not be dis-
closed as part of the disclosure required by this chapter. 
‘‘(b) USE OF TERMS.— 
‘‘(1) RATE.—If other metrics of financing cost 
are disclosed or used in the application process of a 
small business financing, these metrics shall not be 
presented as a ‘rate’ if they are not the annual in-
terest rate or the annual percentage rate. 
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‘‘(2) INTEREST.—The term ‘interest’, when 
used to describe a percentage rate to a recipient or 
potential recipient, shall only be used to describe 
annualized percentage rates, such as the annual in-
terest rate. 
‘‘(c) REQUIREMENT TO STATE APR.—When a pro-
vider states in writing a rate of finance charge or a financ-
ing amount to a recipient during an application process 
for small business financing, the provider shall also state 
the annual percentage rate or, in the case of sales-based 
financing or factoring, the estimated annual percentage 
rate, with equal or greater prominence, using the term ‘an-
nual percentage rate’ or the abbreviation ‘APR’.’’. 
(b) CLERICAL AMENDMENT.—The table of chapters 
for the Truth in Lending Act is amended by adding at 
the end the following: 
‘‘6. SMALL BUSINESS FINANCING ... 191’’. 
(c) RULEMAKING DEADLINE.—Not later than the 
end of the 24-month period beginning on the date of en-
actment of this Act, the Director of the Bureau of Con-
sumer Financial Protection shall issue final rules to carry 
out the amendments made by this section. 
(d) EFFECTIVE DATE.—Chapter 6 of the Truth in 
Lending Act, as added by subsection (a), shall take effect 
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after the end of the 36-month period beginning on the date 
of enactment of this Act. 
Æ 
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