Policy Resolution BED-26-10

WHEREAS, the National Black Caucus of State Legislators (NBCSL) is committed to fostering financial inclusion through improved access to capital and a competitive marketplace that supports safe and consumer-friendly financial products and services;

WHEREAS, the World Bank defines financial inclusion as “when individuals and businesses have affordable financial products and services that meet their needs, delivered in a responsible and sustainable way”;

WHEREAS, consumers across the country, in urban, suburban, and rural communities alike, face a persistent need for access to small-dollar, closed-end credit to meet short-term financial needs or bridge financial gaps;

WHEREAS, not all credit products are structured in a way that supports long-term financial health, and some may expose consumers to unnecessary risks or debt traps;

WHEREAS, core consumer protections are hallmarks of safe and affordable small-dollar credit, and financial transparency, particularly clear disclosure of total costs and fixed payment terms, ensures consumers understand financial obligations and can plan accordingly;

WHEREAS, it is essential that public policy focuses on actual consumer costs reflected in dollar terms, as consumers repay loans in real dollars and cents;

WHEREAS, in 2022, NBCSL passed Resolution BED-22-49, “SAFE AND AFFORDABLE LENDING PRACTICES TO AID CONSUMERS AND ESTABLISH CREDIT,” and in 2025, NBCSL passed Resolution BED-25-02, “PROMOTING ACCESS TO SAFE, TRANSPARENT, RESPONSIBLE LENDING PRACTICES,” both affirming the importance of traditional installment loans in providing consumers with responsible access to credit;

WHEREAS, traditional installment loans are characterized by full amortization where the total repayment, as defined under the Federal Truth in Lending Act, occurs through fixed, periodic payments over a reasonable period and do not include large final balloon payments that can burden consumers;

WHEREAS, best practices for small-dollar, closed-end credit include minimum repayment periods of 120 days, fully disclosed terms, and substantially equal payments to help consumers successfully manage and repay their obligations;

WHEREAS, when used appropriately, small-dollar installment loans can support credit-building, financial recovery, and improved financial outcomes, provided they are reported to at least one major credit bureau Equifax, Experian, or TransUnion; and

WHEREAS, traditional installment lenders offering amortized small-dollar loans play a critical role in offering a safe, regulated alternative to high-risk or non-transparent lending models, and can help mitigate cycles of debt concerns.

THEREFORE BE IT RESOLVED, that the National Black Caucus of State Legislators (NBCSL) affirms that access to small-dollar, closed-end credit in the form of traditional installment loans can serve as a safe and reliable financial resource for consumers, and that the NBCSL supports policies that ensure both consumers and licensed, regulated lenders are protected through fair, transparent, and safe credit agreements;

BE IT FURTHER RESOLVED, that the NBCSL encourages legislators to examine access to safe, regulated installment credit from reputable providers, ensuring that consumers are not pushed toward unregulated or harmful alternatives;

BE IT FURTHER RESOLVED, that the NBCSL urges lawmakers to examine the role of traditional installment loans featuring amortized payments and affordable terms as a practical and responsible way for borrowers to build or rebuild credit, access necessary financial resources, and avoid harmful debt cycles associated with non-amortizing or balloon payment loans; and

BE IT FINALLY RESOLVED, that a copy of this resolution be transmitted to the President of the United States, the Vice President of the United States, members of the United States House of Representatives and the United States Senate, and other federal and state government officials and agencies as appropriate.

• Resolution ID: BED-26-10
• Submitted by: Rep. Carl Anderson (SC)
• Sponsored by: Rep. Carl Anderson (SC)
• Policy Committee: Business and Economic Development Policy Committee