Unapproved Online Lenders Want Piece of Loan Program for Small Businesses
Online and alternative lenders claim they can help employers get access to coronavirus federal funding, but many of these may be predatory lenders not approved by the Small Business Administration (SBA).
Experts worry that some unregulated lenders may trick employers into loans that will cost more than the 1% interest offered by the Paycheck Protection Program, according to NBC News.
The lack of regulatory oversight of alternative online lenders has allowed some of them to charge ridiculous interest rates on non-SBA loans, ranging from 60 percent to 400 percent. While reputable fintech companies like PayPal and Intuit QuickBooks are among non-bank lenders approved to participate in the coronavirus program, many worry that some business owners may fall victim to predatory lenders during the crisis.
“I’m already seeing an uptick in how many predatory lenders are using this language to get small business people to borrow online,” Renee Johnson, senior government affairs manager at Main Street Alliance, told NBC. “They talk about it like they are part of the SBA program but they are not.”