The growth of online lending has been a boon to hair salons, bakeries and other small businesses that don’t qualify for bank credit. Yet this tech-enabled source of credit can mire some in debt they can’t repay, raising concern about inadequate regulation, the Wall Street Journal reported. Some are extending credit at sky-high rates with opaque terms for costly fees and conditions, drawing comparisons with payday lenders who target consumers in need of quick cash, according to critics. “There is a significant number of bad actors who are mostly unregulated,” said Luz Urrutia, chief executive of Opportunity Fund, a California nonprofit that lends in lower-income communities. “They are really wreaking havoc across America’s small businesses.” Nearly a third of the small businesses surveyed applied for online loans in 2018, up from 19 percent in 2018, according to a Federal Reserve study. The market’s growth is driven by loans of less than $100,000, often as small as a few thousand dollars, according to experts.
