Square, PayPal Face Cost Disclosures for Small Business Loans, according to Bloomberg Law

From Bloomberg Law:

Not Just Cookies, a wholesale and e-commerce bakery in Chicago is on a growth spurt. Johnathon Bush, the company’s founder and baked goods aficionado, is opening up more sites in Chicago and soon New York to more quickly distribute his brownies, cookies, and pies to dessert-hungry customers.

But his company’s expansion wasn’t without growing pains when in 2019 Bush took on two merchant cash advances to help meet payroll and pay rent on the brick-and-mortar store he operated out of at the time.

“You’re under tremendous pressure because you have people who are depending on you. So you are in a very bad bind and you are desperate” while exploring financing options, Bush said. A broker steered him toward the merchant cash advance companies even though he would have qualified for lower-cost options, Bush said he later learned.

The funds were delivered fast but came with significant fees on top of the financing rate that weren’t well disclosed, he said. He also felt misled about the interest rate initially offered to him, which didn’t seem to match how much money the company was taking from his accounts on a daily basis.

Continue reading Square, PayPal Face Cost Disclosures for Small Business Loans on Bloomberg Law

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