Description: Lots of companies have tried to use technology to improve small business lending with data, collecting information about merchants from their social media profiles, online accounting software, and reviews to help lenders decide whether to make loans. Alternative companies such as OnDeck and Kabbage have succeeded at increasing loan volumes and speeding approval times. But their loans usually cost more than bank loans or credit cards—sometimes much more.

Source: Businessweek.com

Date: Mar 20, 2014

Link: http://www.businessweek.com/articles/2014-03-20/who-needs-banks-paypal-and-lending-club-want-to-make-small-business-loans#r=nav-fst

Questions for discussion:

• Is there anything wrong with these lending arrangements?
• What are the risks associated with these loans?
• Do you think the interest rates adequately reflect the real risks to lenders?