The SMART Box™ Model Disclosure Initiative
In June 2016, the three largest online small business lending platforms and a leading national non-profit microfinance trade association joined forces with other leaders in the space to create an industry-first model pricing disclosure focused on empowering small businesses to more fully understand and assess their small business finance options. The result of this effort was the development of the SMART Box™ – which stands for “Straightforward Metrics Around Rate and Total cost” – a comparison tool intended to foster common verbiage and enhanced disclosure standards around a comprehensive set of pricing metrics. The SMART Box includes clear and consistent pricing metrics, metric calculations, and metric explanations to help small businesses understand and assess the costs of their small business finance options.
For capital providers interested in adopting the SMART Box, click here to
It is important to note that the SMART Box is not intended to replace a lender’s existing disclosures or detract from the importance of providing clear and conspicuous information to a small business regarding the relevant finance product. The SMART Box is instead intended to serve as a supplemental disclosure that presents key pricing information in a uniform fashion and helps to flag for the small business, in plain English, certain product features or policies.
We ultimately believe that there are many responsible providers and products in the market, but these products often convey their pricing characteristics in different ways. The SMART Box brings a common disclosure approach to these products to help a small business make a more informed decision, including with respect to the product’s fit for a particular business need or use-case and how the product compares to other finance options being considered by the small business.
In order to develop the SMART Box, we launched a 90-day national engagement period over the summer of 2016 focused on fostering an open dialogue with interested lending platforms, trade associations, policymakers, non-profit organizations, small business advocates, and small business owners. The feedback we received helped to inform the final disclosures.
The SMART Box model disclosure will be made available through a license for voluntary adoption by capital providers focused on further empowering small businesses. All authorized adopters of the SMART Box will be required to sign an attestation form confirming their adherence with SMART Box principles and requirements, including the requirement that they agree to have a third-party validate the methodology the provider uses to calculate certain pricing metrics, such as APR.
“The new SMART Box tool is a game changer in driving small business ownership through greater inclusion to capital access,” said Connie Evans, AEO’s President and CEO. “We are proud to be part of a collective cross-sector effort to bring creative solutions to the complex issue of improving capital access to Main Street. It should go far in helping business owners, particularly those in underserved communities, navigate the new frontier of lending options.”
Association for Enterprise Opportunity
October 22, 2016
“Navigant’s Consumer Finance practice looks forward to working with the ILPA on this important self-regulatory initiative focused on customer transparency by providing a quality assurance mechanism and compliance validation,” said Mike Jones, Director, Financial Services, Navigant. “We are happy to be able to bring our expertise to this effort."
Navigant Consulting
October 22, 2016
“Access to capital is a top priority for NSBA and we appreciate how SMART Box allows small businesses to more fully assess and compare lending options. This type of price transparency, along with best practices like the ones adopted by the Coalition for Responsible Business Finance (CRBF), will help solidify the trust between non-bank lenders and small businesses,” stated Todd McCracken, National Small Business Association (NSBA) President and CEO, and an Advisory Board member for CRBF.
National Small Business Association
October 22, 2016
“Finding funding to start or grow your business can be an onerous challenge for small business owners. The growth of online lending platforms has provided small businesses with access to many more options in this tight lending climate,” remarked Kristie Arslan, Small Business & Entrepreneurship Council’s Entrepreneur-in-Residence. “As a small business owner, allowing the vital information of a funding opportunity such as the monthly payments, total repayment amount, cost of capital, fees and much more be pulled out of the fine print and presented with the SMART Box tool will greatly help me and other business owners compare options and make the best funding choice for our businesses.”
Small Business & Entrepreneurship Council
October 22, 2016
"The disclosures developed by OnDeck, Kabbage, and CAN Capital for ILPA are a positive development in enhancing price transparency to the Non-Bank Small Business (NBSB) finance sector and the CRBF welcomes ongoing dialogue with the ILPA on advancement of industry-wide best practices," said longtime small business advocate and Coalition for Responsible Business Finance (CRBF) Executive Director, Tom Sullivan.
Coalition for Responsible Business Finance
October 22, 2016
“ETA believes that industry-driven standards designed to benefit small business customers demonstrates a commitment to responsible innovation and industry leadership, said Scott Talbott, senior vice president, ETA Government Relations. “We applaud the SMART Box initiative for taking a forward thinking approach to addressing a perceived challenge in the market and advancing the depth of the public discussion.”
Electronic Transactions Association
October 22, 2016
“With the growing number of financial products and services becoming available to small businesses, borrowers can benefit from greater transparency in the financing process,” said Doug Lebda, founder and CEO of LendingTree. “The ILPA’s SMART Box empowers small business owners to easily evaluate and compare available financing options, helping businesses make smarter, responsible and more informed financing decisions.”
Lending Tree
October 22, 2016
“The SMART Box is an important tool in our industry that empowers small businesses to better understand and contrast the cost of capital according to four standardized pricing metrics. At Lendio, we work with over 75 lenders across every type of small business loan product. While it is nearly impossible to create a one-size-fits-all metric that compares all business loan options, the SMART Box is a strong step in the right direction,” said Brock Blake, founder and CEO of Lendio. “We’re excited to share the same vision as the ILPA and be a part of this new initiative.”
Lendio
October 22, 2016
“As a long-standing proponent of greater transparency and the industry-wide adoption of best practices, Breakout Capital is proud to provide our endorsement of the SMART Box,” said Carl Fairbank, Founder and CEO of Breakout Capital. “Since our founding, Breakout Capital has consistently advocated for enhanced disclosure and cost transparency for small business borrowers, and we view the SMART Box as an important step forward for our industry in advancing this key mission.”
Breakout Capital
October 22, 2016
"The Business Backer has long been committed to industry-leading transparency, and we are excited to be among the first funding companies to adopt SMART Box," stated Jim Salters, President of The Business Backer, an Enova International, Inc. (NYSE:ENVA) brand. "It's great to see leaders in our industry come together to create standards that promote transparency and ensure small business owners have consistent, clear information when selecting a funding provider. As the online lending and alternative funding industry continues to serve a critical role in providing capital to businesses, this initiative driven by ILPA is a good representation of our commitment to operating in an ethical and fair way."
The Business Backer
October 22, 2016
