H.R. 2540House117th Congress (2021-2023)In Committee

Small Business Lending Fairness Act

Introduced April 14, 2021

AI-Generated Summary

Updated February 8, 2026 at 1:36 AM UTC

The Small Business Lending Fairness Act amends the Truth in Lending Act to stop lenders from using certain unfair credit tactics when extending credit to businesses. It bars practices like requiring a cognovit or confession of judgment, a warrant of attorney, or any waiver that removes a borrower’s right to notice and a hearing, except for limited Louisiana cases. The changes affect any person or entity that provides credit or creates debt in commerce, aiming to protect small‑business borrowers.

Key Provisions

  • Adds a new Sec. 140B that prohibits lenders from taking or receiving obligations that contain a cognovit, confession of judgment, warrant of attorney, or waive the borrower’s right to notice and a hearing, with a narrow Louisiana exception.
  • Specifies that the exemption in section 104(1) does not apply to this new prohibition.
  • Expands the definition of “debt” to include any monetary obligation, even contingent ones, and to cover equitable remedies for breach of performance.
  • Replaces the term “creditor” with “person” in Section 130(a) of the Truth in Lending Act.
  • Updates the table of sections to include the new Sec. 140B on unfair credit practices.

Legislative Activity

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1 earlier action
HouseIntro Referral Latest Action

Referred to the House Committee on Financial Services.

April 14, 2021

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HouseIntro Referral

Introduced in House

April 14, 2021

HouseIntro Referral

Referred to the House Committee on Financial Services.

April 14, 2021

Floor Debate

8 members

What members said about H.R. 2540 on the floor

5 Republicans3 Democrats
Ed Perlmutter
Rep. Ed PerlmutterD-CO-7 · May 12, 2021

Mr. Speaker, by direction of the Committee on Rules, I call up House Resolution 380 and ask for its immediate consideration. Mr. Speaker, for the purposes of debate only, I yield the customary 30…

Guy Reschenthaler
Rep. Guy ReschenthalerR-PA-14 · May 12, 2021

Mr. Speaker, I yield myself such time as I may consume. I want to thank the distinguished gentleman, my good friend from Colorado, for yielding me the customary 30 minutes. The rule before us today…

Don Bacon
Rep. Don BaconR-NE-2 · May 12, 2021

Mr. Speaker, I rise to urge defeat of the previous question so that we can immediately consider my bill to ensure that those who risk their lives to protect all of us are afforded greater protections…

John H. Rutherford
Rep. John H. RutherfordR-FL-4 · May 12, 2021

Mr. Speaker, I thank the gentleman for yielding. Mr. Speaker, I rise to urge defeat of the previous question so that we can immediately consider the Protect and Serve Act, my bipartisan bill to…

Lois Frankel
Rep. Lois FrankelD-FL-21 · May 12, 2021

Mr. Speaker, I thank the chairman for yielding to me. Mr. Speaker, give me a break. Since when is having babies a liberal activity? In fact, I believe that police women have babies, too. And let me…

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Troy E. Nehls
Rep. Troy E. NehlsR-TX-22 · May 12, 2021

Mr. Speaker, I rise in support of the Back the Blue Act, the Serve and Protect Act, and the Jaime Zapata and Victor Avila Federal Law Enforcement Protection Act. Mr. Speaker, all of these are…

Marjorie Taylor Greene
Rep. Marjorie Taylor GreeneR-GA-14 · May 12, 2021

The Pregnant Workers Fairness Act, I rise in opposition to H.R. 1065. There is language that I find many Democrats use in a lot of Democrats' bills. It is called pregnancy rights. Pregnancy rights…

Deborah K. Ross
Rep. Deborah K. RossD-NC-2 · May 12, 2021

Mr. Speaker, debt collectors often operate with impunity, threatening servicepeople, denying small business owners due process, and harassing customers and homeowners with repeated calls, texts, and…

Bill Text

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Introduced in HouseIssued April 14, 2021

I

117th CONGRESS

1st Session

H. R. 2540

IN THE HOUSE OF REPRESENTATIVES

April 14, 2021

Ms. Velázquez (for herself and Mr. Schneider) introduced the following bill; which was referred to the Committee on Financial Services

A BILL

To amend the Truth in Lending Act to prohibit certain unfair credit practices, and for other purposes.

1.

Short title

This Act may be cited as the Small Business Lending Fairness Act.

2.

Obligor transactions

(a)

In general

Chapter 2 of the Truth in Lending Act (15 U.S.C. 1631 et seq.) is amended by adding at the end the following:

140B.

Unfair credit practices

(a)

In general

In connection with the extension of credit or creation of debt in or affecting commerce, as defined in section 4 of the Federal Trade Commission Act (15 U.S.C. 44), including any advance of funds or sale or assignment of future income or receivables that may or may not be credit, no person may directly or indirectly take or receive from another person an obligation that constitutes or contains a cognovit or confession of judgment (for purposes other than executory process in the State of Louisiana), warrant of attorney, or other waiver of the right to notice and the opportunity to be heard in the event of suit or process thereon.

(b)

Exemption

The exemption in section 104(1) shall not apply to this section.

.

(b)

Technical and conforming amendments

(1)

Section 103 of the Truth in Lending Act (15 U.S.C. 1602) is amended by adding at the end the following:

(ff)

The term debt means any obligation of a person to pay to another person money—

(1)

regardless of whether such obligation is absolute or contingent if the understanding between the parties is that any part of the money shall be or may be returned;

(2)

that includes the right of the person providing the money to an equitable remedy for breach of performance if the breach gives rise to a right to payment; and

(3)

regardless of whether the obligation or right to an equitable remedy described in paragraph (2) has been reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured.

.

(2)

Section 130(a) of the Truth in Lending Act (15 U.S.C. 1640) is amended by striking creditor each place the term appears and inserting person.

(3)

The table of sections in chapter 2 of the Truth in Lending Act (15 U.S.C. 1631 et seq.) is amended by adding at the end the following:

140B. Unfair credit practices.

.