Comprehensive Debt Collection Improvement Act

Floor Speech

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Ms. VELAZQUEZ. Madam Speaker, I am a proud original cosponsor of H.R. 2547 and rise in its strong support. This important legislation contains my bill, the Small Business Lending Fairness Act, that prohibits the use of a confession of judgment in commercial loans at the Federal level.

As chair of the House Small Business Committee, I understand better than most how the COVID-19 pandemic has restricted access to capital and forced the closure of many of America's small businesses.

Unfortunately, some lenders and debt collectors are seeking to cash in on the pandemic. Whether it is a taxi driver in New York City pursuing the American Dream or a small business owner trying to make payroll, predatory lenders and collectors have been targeting small businesses with loans that have excessively high interest rates and unfair and abusive terms, like a confession of judgment.

Because cash flow is so vital to a business' survival, many owners feel they have no choice but to sign away their rights to save their businesses and provide for their employees. By signing a confession of judgment, borrowers essentially waive the legal rights regarding any legal dispute that might arise. And if one does arise, the lender can unilaterally declare a default and take actions against the small business owner.

Often, small business borrowers only find out about a judgment against them after the lender begins to seize bank accounts or other assets.

While confessions of judgment have been banned at the Federal level for consumer loans since 1985, these protections have not been extended to commercial loans. Passing this legislation here today will bring us one step closer to finally ending this abusive practice.

I want to thank Chairwoman Waters for including this important language in her bill, and I urge my colleagues to vote ``yes.''

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