Moneytree Inc., a payday lender, has begun
marketing business loans at its northern
Nevada locations.
But it's not a sign of the times.
An executive of the Seattle-based company
says Moneytree has been quietly lending to
small business owners for years, and it began
to develop a formal business-loan program last
winter before the credit crunch began to pinch
small businesses.
It's not cheap credit.
Moneytree says its business loans carry an
interest rate of 0.25 percent of the loan amount
each day with a loan origination fee equal to 10
percent of the principal amount.
For a 30-day loan, which the company says
is about average, that translates into an annual
percentage rate of 212.92 percent.
"It's not intended to be long-term capital,"
says Mark Thompson, the company's director
of governmental relations."It's to solve a short term
liquidity issue."
Moneytree, he says, doesn't yet have a lot of
experience with the lending program it markets
as "Express Business Loans."
"We don't know if it's going to be a viable
product or where it will head," Thompson says.
"These days, it's harder for us to judge credit
quality. It's a bad time to be experimenting."
In years past, he says, Moneytree has done
a steady stream of business with owners of
small companies.
Some of them used the company for checkcashing
services, especially if their capital was
so thin that they couldn't wait three or four
days for a check to clear a traditional bank.
Others turned to the payday lender for shortterm
credit to meet payrolls while waiting for a
big customer to pay up.
The company's Express Business Loans
require a few days for approval after a principal
in the borrowing company files a one-page
loan application.
Moneytree Inc. apparently is pioneering
business loans among payday lenders.
A spokesman for the Community Financial
Services Association of America, a payday
lenders' trade group headquartered in
Washington,D.C., says the group knows of no
other payday lender with a business-loan program
