It’s great when you can go online and within hours receive an infusion of cash. Companies like Lending Club, OnDeck, Fundbox and others make it easy to do just that.
However, the NY Times writes that while borrowing money might start out being sweet – it can turn quite sorry.
In some cases businesses have gong bankrupt yet online lenders still access their bank accounts and take out money.
The NY Times writes – One complaint among some borrowers and consumer lawyers is the way certain companies collect loan payments.
In signing up for loans from Prosper — one of the largest marketplace lenders — borrowers must allow the company direct access to their bank accounts so it can electronically deduct loan payments. Banks and credit card companies offer electronic withdrawals as an option, but they do not always require them.
Moody’s noted in a report this year about Prosper that the
automatic withdrawals made it more likely that “strapped borrowers” would pay their marketplace loans ahead of other expenses.
Small businesses need the financing to grow their business. Lenders want to give those loans and earn money on the loans. If the business runs into trouble and can’t be the interest – or the principal – that’s where problems occur.
The lender for sure does not want to not get paid. Yet small business owners do run on hard times and indeed some have bankruptcy protection. What to do?