Lenders Target a New Subprime Market
From an office near New York’s Times Square, workers at World Business Lenders call truckers, contractors, and florists across the country, pitching loans with annual interest rates as high as 125 percent. When borrowers can’t pay, the company seizes their vehicles and assets, sometimes sending them into bankruptcy, according to more than two dozen former employees and clients. World Business specializes in subprime business lending—or “alternative” lending, as its practitioners prefer to call it—making high interest loans to small companies that have trouble borrowing elsewhere. The industry has swelled to more than $3 billion in loans a year, estimates Marc Glazer, chief executive officer of Business Financial Services, a subprime lender in Coral Springs, Fla. That’s twice the volume of small loans guaranteed annually by the Small Business Administration.
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