There is always a positive and negative side to the rise in certain industries. For fintech, online banks have been created specifically looking to give loans to small businesses. This is largely due to the fact that small business loans are down 60% from 2007 to 2014. Financial institutions have been reluctant to give loans to small businesses since the Great Recession. Only 20% of small business loan applicants are accepted, leaving 80% to find alternative means of financing. As there are no clear regulations on this specific part of fintech yet, it is important that small businesses be extra careful when looking at online lenders. Some aspects to consider include:
- Lack of government protection
- High interest rates
- Transparency in terms and fees
- Taking out multiple loans (loan stacking)
This article pointed out a subset of fintech I had not previously thought about. I agree that no matter what type of loan or where someone finances from, they should be extra careful as to what they are signing up for. I did not realize that the rise of fintech could actually make it easier for such lending practices, but with time there may be more regulations on this practice.
http://www.usatoday.com/story/money/columnist/abrams/2017/01/25/beware-those-fintech-small-business-loans-can-cost-you-bigtime/96680944/