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Small businesses are being harmed by online lenders, two entrepreneur activists told Congress today.
Many small business owners are vulnerable to predatory practices from the unregulated lenders, said John Arensmeyer, founder and CEO of Small Business Majority.
“The transformation in small business lending holds great potential, but this can only be achieved if the industry is built on transparency, fairness and putting the rights of borrowers at the center of the lending process,” the leader of the advocacy group attested before the House Small Business Committee.
He noted the problem of predatory online lenders is particularly acute for small businesses in rural areas which have few places to get traditional loans.
To aid entrepreneurs in their efforts to obtain money without being at the mercy of fraudsters, Arensmeyer said he co-authored The Small Business Borrowers’ Bill of Rights: http://bit.ly/2tlBRcv
The harm predatory lenders can inflict on entrepreneurs is so bad some small businesses are being put out of business by the high interest rates the lenders charge, Sabrina Parsons warned the House panel on behalf of the Main Street Alliance.
The alliance is national network of over 30,000 small business owners. Parson is the CEO of Palo Alto Software, a small Oregon developer of business and marketing plan formats.
While the high interest rates are staring small business owners in the face when they sign on the dotted line, Parsons said the entrepreneurs feel they have to borrow from them because no one else will lend them money.
Responding to the charges, by Arensmeyer and Parsons, U.S. Chamber of Commerce Small Business Policy Chief Tom Sullivan there are plenty of online lenders who are helpful to small businesses as well as the fraudsters who are paying on them.
He praised Intuit and Square for strong due diligence in making small business loans with the years of data they have on the borrowers.
Small Business Committee Chair, New York Democrat Nydia Velázquez said online lenders should be as transparent with small business borrowers as other sources of loans.
February 13, 2019 at 05:44PM
Forbes – Entrepreneurs