Advocates: Small Businesses Need Protection Against ‘Predatory’ Lenders

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Excerpt from INSIDE SOURCES - Anytime they take out a loan, American consumers enjoy protections embodied by a handful of decades-old laws designed to ensure that they know how much credit costs, and that they can comparison shop. But the American small business owner enjoys no such benefits, something a new coalition is trying to change.

As banks have reduced lending to small businesses in the wake of the 2008 financial crisis, other lenders have swarmed into the sector, creating what critics call a rising tide of abuse — this time aimed at struggling business owners — that resembles the subprime mortgage sector that led to bailouts and the worst recession since the Great Depression.

“Small business owners are human beings, and they get taken advantage of the way consumer human beings do. But they don’t have the kinds of protections in the law that consumers have,” said Michael Barr, a law professor at the University of Michigan and a former assistant secretary of the Treasury.

SourceFunding.org differentiates itself by championing a user-centric approach focused on creating sustainable and responsible pathways for financial and economic inclusion, empowering small businesses in their pursuit of low-cost and responsible capital lenders - community banks, CDFIs and credit unions. This approach is in stark contrast to the approach used by predatory online lenders who rely on referral fees from a handful of preferred financial institutions. Our duty is to the entrepreneurs, businesses, and organizations using our platform, not to lenders paying referral fees. Learn more about our Responsible Finance Network™.

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