Sending Office: Honorable Nydia M. Velazquez
Sent By:


Request for Cosponsor(s)

Dear Colleague,

Recent reports[1] have brought to light a predatory lending practice that has targeted our hard-working small businesses: abusive use of confessions of judgement. These legal instruments sometimes require, as
a condition of getting a loan or a merchant cash advance (MCA)[2], that the borrower waive the right to defend themselves if the lender chooses to bring a dispute to court. By requiring the borrower to accept any
and all liabilities and damages pertaining to the loan, it undermines and circumvents the entire judicial process.

With a signed confession of judgement, lenders can legally and without proof, accuse a borrower of not paying and freeze their accounts and assets. Then, without contacting the borrower, they can immediately withdraw the value of the loan, including the
full interest payments, from their accounts. The borrower then has no legal right to dispute these claims or prove their compliance with the terms of the loan contract, making them virtually powerless to reclaim, what usually ends up being, their life’s savings.

Unfortunately, when Congress banned the use of confessions of judgment for consumers in 1985, small businesses were left exposed and remain particularly susceptible to this unfair debt collection practice. Although some states have spread the prohibition
to businesses, many, including New York, have not.

My bill, the Small Business Lending Fairness Act, is simple – it would extend the ban on confessions of judgment to commercial loans nationally by amending the Truth in Lending Act and closing the loophole that has allowed thousands of American
small businesses to be seized and brought down by dishonest lenders.

I invite you to cosponsor this commonsense measure that will give small businesses their long overdue and constitutionally promised right to defend themselves in court and ensure they will no longer have to waive their rights just to get a loan.

If you are interested in cosponsoring this bill or have any questions, please contact Justin Pelletier at


Nydia M. Velázquez

Member of Congress


[1]Z. Faux & Z.R. Mider (2018, November 20). How an obscure legal document turned New York’s court system into a debt-collection machine that’s chewing up small businesses across America.
Bloomberg Businessweek. Retrieved from

Related Legislative Issues
Selected legislative information: Finance, Judiciary, Small Business
Related Bill Information
Bill Type: H.R.
Bill Type: 3490
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