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>Most businesses won't have access to bank rates 50-60% would violate most if not all usury laws, unless you are a bank. Even in my state the usury is capped
by throwaway_law 7y ago
>Most businesses won't have access to bank rates
50-60% would violate most if not all usury laws, unless you are a bank. Even in my state the usury is capped at 18%, so to even charge 20% you have to be a bank or its an illegal loan.
- eloff 7y agoI think factoring finds a way around that. It's often higher than 20%. I don't pretend to understand how it works, but it seems like a great business model.
- jonknee 7y agoUsury laws typically apply to consumers, not loans to businesses. They also probably wouldn't count this type of financing as a loan. Regardless, this exact method of financing already exists and is very popular so I'm going to go on a limb and say that it's legal.
- throwaway_law 7y agoI actually assumed Stripe had a bank license/charter (a quick Google search after your comment suggests they do not). >Usury laws typically apply to consumers, not loans to businesses. That may be a fair characterization, but its definitely a jurisdictional issue state to state. I know some States for sure exempt commercial loans, others exempt loans over certain amounts, and some exempt loans to certain businesses by industry (but not a outright exemption on commercial loans). Obviously Stripe has a good public image, but unfortunately with SV unicorns like Uber, AirBnB, CoinBase (almost any cryptocoin/blockchain start up), its not unfair to say we should just assume business practice comply with the law.