The interest rate charged by credit card companies is small compared to what Merchant Cash Advance (MCA) lenders charge small businesses, which is between 30-70%. MCAs have become as common with businesses as credit cards are with consumers since the pandemic. The MCA lender supposedly buys a percentage of the business’s receivables, but it is really a disguised high interest loan always personally guaranteed by the borrower’s principal. The lender sets up an account where all of the business’s money goes and draws hundreds or sometimes thousands of dollars out of the account weekly or even daily. The business initially relieves a large transfusion of cash from the loan, but is then burdened by the periodic payments. This often causes the business to take out several more such loans to sustain its cash flow, which leads to its eventual collapse.
I hadn’t even heard of that. I’ll have to read up on it.
Thank you for the heads up.