Scientific Opinion Poll: Small Business Owners Want More Regulation of Alternative Lenders
Small business owners concerned with predatory lending; say the best way to protect small business borrowers is through more oversight of alternative lenders
Washington, DC—A scientific opinion poll released today found an overwhelming majority of small business owners feel there should be stronger regulations for online lending in order to protect small firms from financial products that could harm them.
The survey, conducted by Greenberg Quinlan Rosner Research on behalf of Small Business Majority, found 74 percent of small business owners say even though online lending has opened up new sources of capital for small business owners, these lenders should be regulated to ensure small business borrowers are protected from predatory practices.
What’s more, 8 in 10 small business owners favor regulating online lenders to ensure interest rates and fees are clearly disclosed to borrowers. This response makes sense in light of the fact that 78 percent of small business owners believe high-interest, high-fee products currently being offered to small businesses are a problem.
“Small businesses consistently say obtaining more funds is one of their most pressing issues, and new or alternative online lending options have appeared in recent years to help meet this need,” said Small Business Majority Founder & CEO John Arensmeyer. “Although the emergence of more lending choices is a positive development for entrepreneurs, the downside is these new forms of lending have outpaced existing protections, leaving small businesses vulnerable to a few bad actors. It’s crucial that small firms are able to access transparent, responsible lending options, and this can be accomplished through more oversight of the online lending industry.”
The poll also found one-third of small business owners surveyed sought capital or credit in the past 12 months. Of those small business owners who applied but did not receive a loan, nearly half (47 percent) report that they were denied because of a low credit score, while one-third report their application was denied for other reasons.
“I know first hand how difficult it can be for small business owners to obtain loans,” said Pam Guelder, owner of Manndible Cafe in Ithaca, N.Y. “Since small firms like mine usually don’t have many options when we need capital to grow our businesses, it is extremely important that the choices we do have are upfront about their terms and fees. Without more oversight, however, there will likely never be enough transparency in the alternative lending space, and there won’t be much stopping a few dishonest companies from preying on America’s job creators.”
The survey reflects interviews of 500 small business owners nationwide with 1-99 employees. It has a margin of error of +/- 4.4 percent.
For the full poll report, please visit: http://smallbusinessmajority.org/our-research/access-capital/small-business-owners-concerned-predatory-lending-support-more-regulation-alternative-lenders
About Small Business Majority
Small Business Majority was founded and is run by small business owners to ensure America’s entrepreneurs are a key part of an inclusive, equitable and diverse economy. We actively engage our network of more than 55,000 small business owners in support of public policy solutions and deliver information and resources to entrepreneurs that promote small business growth. Our extensive scientific polling, focus groups and economic research help us educate and inform policymakers, the media and other stakeholders about key issues impacting small businesses and freelancers. Learn more about us on our website and follow us on Twitter, Facebook and Instagram.