Short title; Findings

(a)

Short title

This Act may be cited as the

Small Business Credit Card Act of 2018

. (b)

Findings

The Congress finds as follows: (1)Economic growth has frequently been led by the creation of millions of new, small businesses. (2)Today, small business owners are severely limited in their ability to finance new business ventures because access to capital through traditional resources has been restricted. (3)In 2017, 27 percent of small businesses surveyed cannot access adequate financing. (4)Small businesses are being pushed into using credit cards to meet capital needs. (5)This use of credit cards is especially true for innovative and rapidly growing businesses which lack the assets necessary for a traditional loan. (6)In 2017, 20 percent of small businesses say they were forced to reduce their number of employees as a result of inability to access financing. (7)In 2017, 31 percent of the small businesses surveyed used credit cards to meet their capital needs. (8)In 1993, only 16 percent of small businesses used credit cards as a source of financing. (9)One-half of small businesses using a credit card carry a monthly balance, and one-quarter of small businesses carry a monthly balance in excess of $10,000. (10)The average interest rate charged on small business credit cards is 14.16 percent. (11)Nearly one-in-three small businesses with credit cards have reported a worsening of terms, including increased interest rates, fees, and payment procedures, making it more difficult to expand operations or grow business. (12)Small business credit cards contracts do not include consumer protections provided to individuals under the CARD Act.

Extending credit card protections under the Truth in Lending Act to small businesses

(a)

Definition of consumer

Section 103(i) of the Truth in Lending Act (15 U.S.C. 1602(i)) is amended— (1)by striking The adjective consumer, used with reference to a credit transaction, characterizes the transaction as one in which the party to whom credit is offered or extended is and inserting

Consumer.—(1)

In general

Except as provided in paragraph (2), the term consumer, when used as an 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

(2)by adding at the end the following new paragraph:

(2)

Small business included under certain circumstances

(A)

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. (B)

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— (i)the credit card account is in the name of an individual or a business entity; and (ii)any credit transaction involving such account is for business or personal purposes. (C)

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.

(b)

Amendments to exemptions

Section 104(1) of the Truth in Lending Act (15 U.S.C. 1603(1)) is amended— (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 (2)by inserting other than qualified small businesses after organizations. (c)

Business credit card amendments

Section 135 of the Truth in Lending Act (15 U.S.C. 1645) is amended— (1)by striking The exemption provided by and inserting (a) In general.—The exemption provided by; and (2)by adding at the end the following new subsection:

(b)

Qualified small business opt out from coverage

(1)

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— (A)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; (B)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 (C)of the procedures for making the election and for subsequently revoking any such election. (2)

Election

The Board shall prescribe procedures for making an effective election under this subsection and for revoking any such election. (3)

Prohibition on discrimination against qualified small business

No creditor may— (A)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 (B)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.