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Posted 3/19/2026

For small and medium businesses (SMEs), capital remains one of the major hindrances of progress. Due to the complexity in accessing structured loans offered by regulated entities like banks, which often have strict requirements, most of the SMEs have been resorting to unregulated loans. However, most borrowers end up being prey to predatory terms, a reason why any business owner should evaluate more what comes with unregulated loans.

As part of consumer protection, the government has been capping terms of loans in an effort to safeguard businesses from exploitation. However, this only applies to certain entities registered with the government. Still, there are no regulations that require transparency of loan terms or that limit interest rates, discloses fees, and properly licenses business-lending companies… Click Here. 

Companies associated with Yellowstone Capital and its successors settled a lawsuit in 2025, which claimed they had been providing predatory financing to small businesses, with annual rates upwards of 820%… Click Here. The settlement involved debt cancellation and restitution to over 18,000 small businesses across the country.

Government involvement in the protection of consumers gives the impression that unregulated loans are a destructive factor disguised as business support. The activity of lenders could be monitored by a special financial-regulating body. In the United States, several resources are available but, as of yet, are not dedicated to this endeavor: the office of the state attorney general at the state level and at the federal level and the Consumer Financial Protection Bureau (CFPB).

Increased legitimate small-business loan facilities, including low-interest, long-term credit from regulated banks or state-sponsored SME support facilities, could prove beneficial. A supply of such options would decrease the use of predatory alternatives when the cash flow is in a crunch.

Lending institutions may not be solely responsible for predatory lending, as the borrower has the obligation to perform their due diligence. Investigating companies prior to borrowing is not only logical but also imperative. Companies that ignore their duties aren't blameless.