New Jersey Bill Seeks to Eliminate Quick Easy Access to Small Business Loans

The speed at which a small business owner can access capital to grow and create jobs in New Jersey is too dangerous and must be stopped. This is the takeaway from a bill (S3617) proposed by New Jersey State Senator Nellie Pou that calls for a minimum 3-day waiting period between when contract terms are disclosed to an applicant and when they can actually go through with getting a business loan or merchant cash advance. If the transaction does not fund within 10 days of the terms being disclosed, it implies that the waiting process must start over if the applicant wishes to still go forward.

The motivation behind the bill is to presumably force small business owners to think about the terms for awhile. It would apply where the payment frequency is greater than bi-weekly or the maturity is less than two years. There’s other little caveats too. If it passed, funding small businesses same-day or next-day would effectively become illegal.

In addition, the bill calls for detailed contract disclosures, proof that the funds will be used to economically benefit the small business applicant, lenders to set up their own complaint departments, licensing, bonding requirements for brokers & lenders, a minimum net worth for a broker of $100,000, background checks, written examinations, and ethics classes as part of continuing required education.

Pou’s bill, which at this point has not had the opportunity to get traction yet, is separate from another bill, S2262, which in addition to disclosures, calls for merchant cash advances to be defined as loans in the state. S2262 passed the Senate in February and is now under consideration in the Assembly.