The Virginia Small Business Commission made no recommendation on Virginia House Bill 2198 this week, leaving the commercial credit reporting bill effectively dead for the remainder of the year.

The credit information industry and the National Association of Credit Management (NACM) are opposed to HB 2198 since its introduction in January, and will continue to oppose it as the debate over the bill carries into the new year.   Specifically, the credit information industry and NACM believes that HB 2198’s provisions that would force commercial credit reporting agencies to reveal the identity of their sources of so-called “negative information” on the subject of a commercial credit report would cool the free and open exchange of credit information in Virginia, create a patchwork of regulations nationwide that would negatively affect credit availability and set a dangerous precedent for the regulation of commercial credit reports in general.

Source:  National Association of Credit Management

BIIA Comment:  There is a general consensus by international institutions such as the G20,  the World Bank, the IFC (World Bank Group), the European Commission and various national business development organizations, that the lack of access to finance for small businesses is caused by information asymmetries (lack of accurate, reliable and timely information).

There is an effort underway to identify the causes of information asymmetries and to work on recommendations to improve the availability of accurate, reliable and timely information on small businesses through more intensive information sharing, thus leading to greater transparency in risk assessment.  The end result would be greater access to finance and credit for small businesses. 

The Virginia House Bill 2198 is going in the opposite direction and thus will be more harmful for small businesses.