New Jersey small businesses have faced a tumultuous 2025. Decreasing consumer confidence, surging health care costs, and an uncertain economy have made it harder than ever to thrive or even stay afloat. But our lawmakers, and the outgoing Murphy administration, can give our struggling small business owners the perfect lame-duck legislation holiday present. Passing the Small Business Truth in Lending Act, sponsored by Senator Troy Singleton and Assemblywoman Verlina Reynolds-Jackson, into law would give these owners, and in particular small business owners of color, a lifeline to fair financing in these troubled times.
Small business lending has changed dramatically over the last decade. Currently, about half of all financial services worldwide are now offered by companies not classified and regulated as banks. While this has increased financing opportunities, it’s also opened small business lending to misleading financing rates.
While lenders are required to tell people the annual percentage rate, or APR, on loans to consumers, small business owners are excluded from these transparency standards. APR is a key figure for comparing loan offers because it reflects the full expense of a loan, including all the fees and interest. It enables an apples-to-apples comparison between financing options with different financing amounts, structures, expected term lengths, or combinations of interest and fees.
Without this information, small business owners are being charged the kind of financing rates we usually associate with predatory lenders—200 percent or higher, and sometimes even as much as 350 percent. A business owner might think they’re taking out a routine short-term loan, only to discover they’ve locked themselves into a product that drains their revenue and undermines their ability to grow. And without knowing the APR, they have no meaningful way to compare that product to other offers that might be far more affordable.
The costs are staggering. New Jersey’s small businesses are overpaying between $133 million and $632 million annually in unnecessary interest and fees — often to out-of-state financing firms. That’s money that should stay in local communities — funding payrolls, rent, equipment, expansion, or simply the ability to keep the doors open.
This is particularly burdensome for small business owners of color. Hispanic small businesses in New Jersey are estimated to overpay between $26 million and $122 million annually. Black-owned businesses are overpaying an estimated $16 million to $75 million. Again, this is money that should stay in local communities; it’s being siphoned off through financial products whose true costs are hidden.
Nonbank lending companies shouldn’t be allowed to obfuscate their prices to small business owners to appear less expensive. The Small Business Truth in Lending Act would give our small businesses the same protections available to everyday consumers under the 1968 federal Truth in Lending Act—any small business taking out a loan or financing package would be able to see the annual percentage rate (APR) upfront and compare costs across lenders, and so make properly informed decisions. Two of our nation’s largest and most diverse state economic engines—New York and California—have already implemented similar legislation.
The bill doesn’t force price caps or no limits on what lenders can offer—just honesty in how those prices are presented. It has the support of a vast majority of New Jersey small business owners, business groups such as the New Jersey Sustainable Business Network, community and civil rights groups like the National Community Reinvestment Coalition, and many lenders, including those in the Responsible Lending Coalition, who back transparency because they want a level playing field where fair lenders aren’t undercut by competitors who obscure real costs.
There are other ways to help our small business owners, and in particular business owners of color. Passing a state-level Community Reinvestment Act would foster investment among low- and moderate-income communities and communities of color who have been underserved by investment and financial institutions for decades.
But at a time when inflation is still hammering margins and labor and supply costs continue to climb, our state lawmakers could greatly improve financing options for small businesses by pushing through this straightforward bill. And Governor Phil Murphy’s legacy for his last lame duck legislative session could include a critical boost for small business owners throughout New Jersey struggling in an uncertain economy.
Shane Heskin is a small business owner with an office in Cherry Hill. His law firm, Heskin & Proper, represents other small business owners who have been harmed by nonbank financing companies that are not transparent about the prices they charge.
Beverly Brown Ruggia is the Financial Justice Program Director for New Jersey Citizen Action, a statewide advocacy and empowerment organization that fights for social, racial and economic justice for all.
