Until recently, online business lenders faced little government regulation. The Wall Street Journal reported that some companies have gotten away with increasing annual percentage rates to 100 percent or more on short-term, online business loans. Therefore, a movement toward transparency has been long awaited in the world of finance. Fortunately, the Innovative Lending Platform Association (ILPA) has pioneered the effort with their latest tool that separates good companies from the bad.
Fast and Easy Funds reports small businesses can finally trust the transparency of business lenders with the newest tool, “SMART Box”. SMART Box stands for Straightforward Metrics Around Rate and Total Cost Box, and it was released in late October. It gives small businesses the opportunity to compare annual percentage rates and total amounts to be repaid for loans of the same duration, from company to company. This tool is essentially a voluntary form of self-regulation amongst lenders, and sets the standards for company practices. Right now, there are 3 versions of the SMART BOX disclosure available for comparison: term loans, lines of credit, and merchant cash advances.
Business lenders like Fast and Easy Funds know transparency is an important practice of running a successful, trustworthy company. SMART Box promotes standardization and common terminology amongst lenders to help small business owners make the best decision for their company.
Small Business & Entrepreneurship Council’s Kristie Arslan said of the new tool, “As a small business owner, allowing the vital information of a funding opportunity, such as the monthly payments, total repayment amount, cost of capital, fees, and much more, to be pulled out of the fine print and presented with the SMART Box tool will greatly help me and other business owners compare options and make the best funding choices for our businesses.”