A bipartisan initiative to outlaw Confessions of Judgment from small business loan and merchant cash advance transactions is making noise on Capitol Hill this week. The Small Business Lending Fairness Act was introduced in the Senate by Senators Marco Rubio and Sherrod Brown and in the House by Representatives Nydia M. Velázquez and Roger Marshall.
The bill seeks to build upon a similar law that just passed in New York. S6395 in New York prohibits anyone from entering a Confession of Judgment (COJ) in New York against a non-New York debtor. It is slated to go into effect as soon as the governor signs it.
New York’s process for turning COJs into executable judgments was the friendliest, which is why it had been the venue of choice for years even among parties that entered into transactions with no nexus to New York.
This new federal bill is attempting to eradicate the use of COJs in small business loan transactions in every state, despite there being no media reports of abuse outside of New York.
Velázquez is attempting to rally support for the bill through a hearing being held on June 26th, titled “Crushed by Confessions of Judgement: The Small Business Story.” It is being live streamed on Youtube.