The Dodd-Frank Wall Street Reform and Consumer Protection Act, known commonly as Dodd-Frank, was enacted in 2010 under President Obama as a response to the financial crisis that led to the Great Recession. The ultimate goal of the legislation was to safeguard the economy and protect consumers by implementing financial regulations. Several components have drawn the ire of the financial world and many have wondered whether Dodd-Frank’s restrictions have actually made it harder to grow the economy.
More Than Just Two Sides
Proponents who believe Dodd-Frank should be repealed say that the measures implemented by Dodd-Frank were overly restrictive and limited banks too much, forcing them to decrease their lending and ultimately harming the nation’s economy. For example, the Volcker Rule, which has received some airtime recently, limits how banks can invests. Those who are against Dodd-Frank and the Volcker rule, in particular, believe this has curtailed the financial abilities of banks and hindered their abilities to be more profitable.
Some economists believe that Dodd-Frank would benefit from additional reforms to ensure that consumers remain protected but that oversight committees monitoring the activities of banks and financial institutions are more diverse.
Those who are against repeal believe Dodd-Frank’s protective measures are necessary for ensuring that the country does not enter into another recession because of high-risk financial activities that put consumers at risk. They believe the committees established by Dodd-Frank to monitor financial institutions and to protect consumers are necessary and may even need to be made stronger to ensure their survival.
As with any piece of legislation, there are many differing opinions. The current administration is poised to tackle Dodd-Frank and appears ready to both reform particular aspects and scrap others through both executive orders and legislative action. But what could this mean for small business?
The Economic Future for Businesses
For businesses, repeal of Dodd-Frank may mean a changing lending landscape. While some believe that reduced regulations will lead to more loans for small businesses, others are right to be wary. Citing that the amount that small businesses often need to borrow is generally too small for large banks to concern themselves with, some businesses do not expect any change to large banks’ small business lending activities.
How much repeal of or amendment to Dodd-Frank will help small businesses remains to be seen, however, history has shown that regardless of the state of the economy or financial legislation, many banks are reticent to lend to small businesses. It is likely that those same banks will continue to fund only a small percentage of small business loans, leaving millions of small business owners without the capital they need to grow their businesses.
Bank Loans Aren’t the Only Option
Thankfully, other options like factoring and purchase order financing help fill the gap by providing small business owners with vital cash flow quickly.
Capstone Corporate Funding, LLC, specializes in providing business owners with multiple business funding solutions. Our invoice factoring and purchase order invoicing services allows qualified business owners to gain access to necessary cash flow faster so they can remain competitive. In today’s marketplace, that’s essential for a business to remain viable. If you’re ready to learn more about the options available to you, call us today at 212-755-3636 or contact us online.
