Online lenders cripple businesses with quick cash offers
More small business owners are falling prey to online 'predatory' lenders offering them quick cash. Struggling with mounting tax office debt and slowing income the business owners sign up to contracts for fast credit that land them in hundreds of thousands of dollars of more debt. Some of these loans come with interest charges as high as 300 per cent.
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TVTranscript
00:00 Being in the window frame business was supposed to be lucrative for Mia Li, but when builders
00:07 stopped paying her for the frames she supplied, the debt started mounting.
00:12 Just after COVID, I have to say we got very bad effects because some clients, they just
00:18 bankrupt.
00:19 With about half a million dollars owed to suppliers and the ATO, Mia got desperate.
00:25 She went to a broker who got her a loan quickly, but she later learned it was a trap.
00:30 The loan would end up costing her another $100,000 in interest and fees, and her home.
00:37 I just can't sleep.
00:39 Can't sleep.
00:42 Very challenged, but yeah, trying to get rid of it.
00:47 People come to us in trouble.
00:48 Gavin Waring offers small businesses tax advice.
00:52 He wants the law changed so small businesses with less than $2 million in turnover have
00:57 the same protections as consumers.
00:59 Here's some loans.
01:01 This is 140%.
01:03 What they don't realise is that the minute they're doing this with an ABN, either under
01:07 a sole trader partnership or company, that their all bets are off.
01:12 Assistant Treasurer Stephen Jones acknowledges loan sharking is unfair, but says changing
01:17 the law could have unintended consequences.
01:20 If you lift the bar around the responsible lending obligations, what you can end up doing
01:27 is locking small businesses out of mainstream credit markets.
01:33 But tax advisors like Gavin fear that with $34 billion worth of debt owed by small business
01:39 to the ATO, the loan sharks will keep circling.
01:42 [BLANK_AUDIO]