Sales people said they were told to refer to “short-term capital” instead of loans and “money factors” instead of interest rates. Eight of them said they talked business owners into applying by saying they’d offer a good rate after reviewing bank statements.
World Business Lenders charged most people 125 percent annualized interest rates on six-month loans regardless of their situation, five former employees said. The borrowers often put up cars, houses or even livestock worth at least twice as much as the loan. About one in five were going bust as of last year, two people with knowledge of the matter said. One said that 9 percent of the loans made this year have already defaulted.
“The sweet spot is someone who can limp along well enough for six months but probably isn’t going to be around much longer. They’re in the business of helping these businesses fail.”
As usual, the Fed is subsidizing the rich and leaving everyone else hanging out to dry.