Is a loan with a 37 percent interest rate worth it?

MARLBORO – His bills during the slow winter were coming due. He needed to ramp up his marketing. And local banks were turning him down when he asked them for money.So Chris Dutka, the owner of the catering business Christopher’s Kitchen, turned to online lender OnDeck and quickly was approved for $8,000.”They approved me that day or the next day,” Dutka said. “Within two to three days, they deposited the money in my checking account.”Dutka is one of a growing number of small-business owners turning to online lenders for money that can help them get through tough times, buy inventory and run their day-to-day operations. In short, they are finding a new source of financing in the digital age after years of struggling to get approval from traditional banks.The budding industry, however, is raising caution flags among consumer advocates. They say the annual interest rates of more than 20 percent can be onerous. And while banks are meeting new requirements from Dodd-Frank Act, online lenders are flying under the regulatory radar.The Consumer Financial Protection Board, for example, could collect data to ensure the lenders don’t make predatory loans, said Karen Mills, a senior fellow at Harvard Business School and former administrator of the U.S. Small… Read full this story

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