South OC Times

U.S. Representative Young Kim (CA-40) has introduced the Small Dollar Loan Certainty Act in an effort to enhance access to capital for consumers and small businesses. The Act is a response to guidance issued by federal agencies in May 2020, which enabled banks and credit unions to offer automated small loans and establish responsible lending principles. The Small Dollar Loan Certainty Act seeks to enshrine this guidance into law, thereby providing stability to the small-dollar market and safeguarding consumers.

Rep. Young Kim stated, “Policies from Congress should make life easier for Americans, not harder. The Small Dollar Loan Certainty Act will provide clear principles for financial institutions providing small-dollar loans and ensure working Americans can access the capital they need.” She further expressed her commitment to reducing regulatory costs, defending consumer rights, and protecting the American dream for future generations as part of her role on the Financial Services Committee.

The Small Dollar Loan Certainty Act proposes amendments to the Truth in Lending Act that would permit covered entities – insured depository institutions or Federal credit unions – to offer small-dollar credit products to consumers. These amendments include:

- Establishing requirements for providing small-dollar installment loans and lines of credit;

- Mandating a robust underwriting process for determining creditworthiness;

- Ensuring funds are distributed to consumers within five days of approval;

- Prohibiting fees against consumers associated with a small-dollar credit product.

For more information about the bill, click HERE.