Former CNN broadcaster and TV personality Larry King has found himself in the midst of a controversy related to advertisements he appears in on behalf of the LendVantage small business loan company. On the LendVantage website, a message on the home page in September said, “LendVantage offers more partners and business loan options to give you the best opportunity for business funding. We are endorsed by Larry King.” —
But right after Labor Day, Bloomberg Businessweek posted an article describing how the commercials, which have been airing since June on cable TV stations, promote loans that can be extraordinarily expensive.
The article cites one example from the LendVantage website of a small business loan that could ultimately cost the borrower an annual percentage rate of more than 100%.
The Bloomberg Businessweek article goes on to say that the typical annual percentage rate on a business credit card is only 16%.
Most consumers realize that credit card borrowing is one of the most expensive ways to access funds, so this example underscores just how costly a loan with a 100% annual percentage rate is when compared to other available options.
The real issue that is being raised by the controversy, however, is one that has been discussed for years, and that is that many small business lenders, so-called “payday lenders,” and other sources of fast cash from loans are known for charging exorbitant interest rates.
As Meghan Robinson, CEO of Sunovis Financial has for years been an outspoken critic of lenders who charge terrifically steep interest rates, saying that small businesses who rely on these kinds of costly loans often regret it in the end. “There are many lenders, unfortunately that charge extremely high rates and fees,” Robinson reiterates, “and that can give the entire business of private lending a bad name and damage the reputation of lenders in general. But the truth is that the majority of private small business lenders and other alternative loan companies do provide a much-needed and legitimate service. They can fund loans that are not only attractive, but are also available to individuals and business owners who may not have great credit. Private lenders like Sunovis also offer a variety of high-quality loan products and creatively useful ways for small businesses to access capital quickly, conveniently, and affordably.“
In his defense, King acknowledged that he is merely a spokesperson for LendVantage and he indicated that is ultimately up to borrowers to determine whether or not a particular loan is appropriate for their financial purposes. It is also noteworthy that LendVantage, a company based in Nevada, does not provide loans directly to businesses. Instead, it simply gathers information from potential borrowers and shares that data with lenders who specialize in providing funding to merchants who may have been turned down by banks.
“The bottom line,” advises Robinson, “is that you should shop carefully and wisely for your small business loans. Ask probing questions, perform due diligence investigations and make sure you understand the small print before you sign on the dotted line. There are plenty of resourceful small business lenders across America, who have stellar reputations and a proven track record. So do comparison shopping until you find a loan that is appropriate to your needs and your unique financial situation.”
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