Predatory lending cripples business half a lifetime in the making
Zachary_SBM
Director of Digital Engagement and StrategyMember admin
In this week's article, we speak with Johnathon Bush, the owner of Not Just Cookies Bakery in Chicago. Johnathon discusses the struggles he has faced with predatory merchant cash advance (MCA) loans.
This story highlights how there are predatory lenders out there who target small business owners in need of capital without disclosing the true cost of the financing in their offers and contracts and who mask extremely high-interest rates. Have you ever been targeted by predatory lenders or acquired financing with predatory loan terms? Let the community know!
Predatory lending cripples business half a lifetime in the making
Small Business Majority
November 6, 2019
While many 13-year-olds dream of becoming firefighters or football players, 13-year-old Johnathon Bush not only dreamed of being an entrepreneur but was already becoming one. While growing up in Toledo, Ohio, he realized the only way he could make money at a young age was through entrepreneurship, so he started baking cookies and selling them to friends and family. But, his bake sales evolved into something bigger than his middle school self could have expected.
Comments
As I was reading this article the think that kept coming to my mind was, “did he talk with a financial advisor or did he make this financial choice on his own?” When people make financial choices it’s important to understand the ramification of those choices and that’s what [true] financial advisors do. As a financial advisor I understand that this may be self-serving, but is it any more self-serving than a physician telling someone they should consult with a medical doctor before engaging in medical treatment?
The article made mention that there should be laws in place, there are laws in place, but those laws cover the written contract. Don’t take this post the wrong way, I agree that there is predatory lending, and that Johnathon was very likely prey to a sales person looking to earn another commission and not caring about Johnathon or his business. Also, as a fiduciary for my clients, I want to see protections against people taking advantage of other people. But because those people exist and will always exist, our best protections are to surround ourselves with people who have our best interest at heart.
Thanks for your insightful post, Karl! Agree that financial advisors can help a lot of business owners navigate the very complicated small business lending landscape.