Legal 'loan sharks' may be exploiting coronavirus to squeeze small businesses
Small businesses have borrowed billions from unregulated merchant cash advance companies. Now, amid the coronavirus crisis, the lenders have come for their money.
Jason Indelicato, who owns a three-store clothing chain in Massachusetts called North River Outfitter, is under siege. As with many small business owners, he has closed his stores because of the coronavirus pandemic, and his revenues have disappeared.
Still, the virus isn't the worst of Indelicato's woes, he told NBC News. A lender is.
On March 19, as COVID-19 spread across the U.S., triggering a national emergency, a merchant cash advance company sued Indelicato and his wife, Alice. The company, PowerUp Lending Group of Great Neck, New York, had given North River money to be repaid from the stores' future sales. Now those sales are nonexistent — but PowerUp's suit demanded immediate payment of almost $91,000, plus legal fees. (The suit is now on hold.)
"I don't see how companies that are collecting future receipts can be litigating against companies that don't have any receipts," Indelicato said.
Rest of the story here: https://www.nbcnews.com/business/economy/ftc-official-legal-loan-sharks-may-be-exploiting-coronavirus-squeeze-n1173346
The term "merchant cash advance company" was a new one to me. Sounds like a very lucrative operation with a heart for preying on small businesses that really need cash to grow and survive.
I know, I know..... no one forced these small businesses to sign-up with the cash advance company. And yes, there is a contract...... and yes, it is legally enforceable.
But seriously, where is the compassion and grace? Our small businesses don't need any other emergencies right now.
Grace & Peace & Love to you all -
Matt