"The debt is like a mountain"
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Dear readers, this week we looked at a group of online lenders pushing for more regulation of... online lending...
Natasha Larbie, who owns a construction firm with her husband in Katy, Texas, a Houston suburb, ran into the kind of cash flow problem that many small businesses face. Pearlorm Construction signed several contracts last year for new jobs but wouldn’t get paid until those jobs were done, perhaps months later.
Larbie needed cash to pay for materials and workers. She turned to online lenders who promised quick, easy financing — but it was hard to compare options. One offered the cash she needed in exchange for a portion of her sales receipts. She took the money, and soon the lender began deducting daily payments from her bank account. “The debt is like a mountain,’’ Larbie said. “It’s an obstacle you have to fight to get over.”
While loans for consumers face strict rules regarding transparent terms and fees, business financing is a virtual Wild West. Online lenders have proliferated in recent years, some of them ensnaring small businesses in costly loans they don’t understand. There’s enough frustration with online lending that even some online lenders say it’s time to rein it in.
An unusual coalition of business lenders and small-business advocates has been pushing to change the industry. As the coronavirus pandemic threatens the existence of millions of small businesses, their demands have special urgency.
What do you think? We'd love to hear from you. Cheers, Laura, Amanda and Kyla |
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