Copy of American Fintech Council (AFC) Announces Support for Maryland Legislation Promoting Transparency and Regulation in Small Business Financing
- louis4952
- Jul 12, 2023
- 1 min read
FORBES.COM July 12, 2023
Over the past four years, Darren Preston turned his Malibu’s Burgers food truck into one of the most popular restaurants in the San Francisco Bay Area. Despite lines out the door and rave reviews, Malibu’s filed for bankruptcy early last year. The cause had nothing to do with the food. What appeared to be a standard loan from an online lender turned out to be a receivables purchase agreement, a complicated arrangement loaded with hidden fees and sky-high interest rates that put Preston’s business more than $100,000 in debt.
Stories like Preston’s are common. Predatory lending has become a systemic problem for small-business owners over the past 15 years. After the Great Recession, large banks reduced their lending to small businesses, leaving a financial vacuum that has been filled by alternative lenders—many of whom exploit businesses locked out of other financing sources.