I
111th CONGRESS
1st Session
H. R. 3457
IN THE HOUSE OF REPRESENTATIVES
July 31, 2009
Mr. Abercrombie (for himself, Mrs. Lowey, Mr. Michaud, and Mr. Perriello) 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.
Short title; findings
Short title
This Act may be cited
as the Small Business Credit Card Act
of 2009
.
Findings
The Congress finds as follows:
In past recessions, economic recovery has frequently been led by the creation of millions of new, small businesses.
Today, however, small business owners are severely limited in their ability to finance new business ventures because their access to capital through their usual resources has dried up, and the lack of access continues to grow.
Small businesses are being pushed into using credit cards as their primary source of working capital.
This use of credit card credit is especially true for rapidly growing businesses that are not traditional brick and mortar operations, and lack the assets necessary for a traditional loan.
Yet, 28 percent of businesses surveyed recently said they had been subject to a decrease in their line of credit or a credit card limit in the past 6 months.
And, this decrease in credit card limits occurred despite the fact that 69 percent of the small businesses in the survey cited worsening credit card terms.
In 2008, 44 percent of the small businesses surveyed used credit cards to finance their business.
In 1993, only 16 percent of small businesses used credit cards as a source of financing.
One-third of small businesses using credit cards carry a monthly balance in excess of $10,000.
Extending credit card protections under the Truth in Lending Act to small businesses
Definition of consumer
Section 103(h) of the Truth in Lending Act (15 U.S.C. 1602(h)) is amended—
by striking
(h) The adjective
and
insertingconsumer
, used with reference to a
credit transaction, characterizes the transaction as one in which the party to
whom credit is offered or extended is
(h) Consumer.—
In general
Except as provided in
paragraph (2), the term consumer
, when used as a adjective to
describe or modify a credit transaction or credit plan, means a transaction or
credit plan under which credit is offered or extended
to
; and
by adding at the end the following new paragraph:
Small business included under certain circumstances
In general
For purposes of any provision of this title relating to a credit card account under an open end credit plan, the term ‘consumer’ includes any qualified small business.
Qualified small business
For purposes of subparagraph (A), the term
qualified small business
means, with respect to any credit card
account under an open end credit plan, any business concern having 50 or fewer
employees, whether or not—
the credit card account is in the name of an individual or a business entity; and
any credit transaction involving such account is for business or personal purposes.
Exclusion of
small business after opt out
effective date
The
term qualified small business
shall not include any business
concern described in subparagraph (A) after the effective date of any election
under section 135(b) by the individual or business for which the credit card
account referred to in such subparagraph has been established, so long as such
election remains in
effect.
.
Amendments to exemptions
Section 104 of the Truth in Lending Act (15 U.S.C. 1603) is amended—
in paragraph (1)—
by inserting
other than a credit transaction under an open end consumer credit plan
in which the consumer is a qualified small business
after
agricultural purposes
; and
by inserting
other than qualified small businesses
after
organizations
; and
in paragraph (3),
by striking $25,000
and inserting $50,000
.
Business credit card amendments
Section 135 of the Truth in Lending Act (15 U.S.C. 1645) is amended—
by striking
The exemption provided by
and inserting (a)
In general.—The
exemption provided by
; and
by adding at the end the following new subsection:
Qualified small business opt out from coverage
Notice of coverage
The disclosures under section 127(a) before opening a credit card account under an open end credit plan for a qualified small business shall include a clear and conspicuous disclosure—
that the qualified small business is treated as a consumer under this title and is subject to the requirements of this title as a consumer;
that the business may elect, in accordance with this subsection, to be exempt, under section 104(1), from this title to the same extent as any business other than a qualified small business; and
of the procedures for making the election and for subsequently revoking any such election.
Election
The Board shall prescribe procedures for making an effective election under this subsection and for revoking any such election.
Prohibition on discrimination against qualified small business
No creditor may—
discriminate against any business concern having 50 or fewer employees in connection with any credit card account of, or any application for a credit card account by such business, under an open end credit plan on any basis; or
require any qualified small business to make an election under this subsection as a condition for opening a credit card account, or for providing more advantageous terms for any credit card account, under an open end credit plan.
.