Small Business Lending - Research
This Fact Sheet examines the terms of loans from major online lenders to small businesses. This analysis revealed that non-bank “fintech” loans to small businesses lack transparency regarding costs and terms, have effective interest rates up to over 350%, and include junk fees averaging $795 per loan. These loans, which resemble payday loans and the toxic subprime mortgage loans that led to the Great Recession, are made without regard to small business borrowers’ ability to repay and often trap borrowers in debt.
This report examines geographic patterns of access to bank capital for businesses in the Chicago six county region, with a focus on smaller loans and other types of credit, amounts under $1 million, that are more likely to benefit smaller, local businesses that create economic opportunity within neighborhoods. For small neighborhood businesses to grow, they need to be able to access capital, and one common source of capital for small businesses are loans, lines of credit, and business credit cards (collectively, “small loans”) issued by banks and other financial institutions.