Payday lender making loans to business

Moneytree Inc., a payday lender, has begun

marketing business loans at its northern

Nevada locations.

But it's not a sign of the times.

An executive of the Seattle-based company

says Moneytree has been quietly lending to

small business owners for years, and it began

to develop a formal business-loan program last

winter before the credit crunch began to pinch

small businesses.

It's not cheap credit.

Moneytree says its business loans carry an

interest rate of 0.25 percent of the loan amount

each day with a loan origination fee equal to 10

percent of the principal amount.

For a 30-day loan, which the company says

is about average, that translates into an annual

percentage rate of 212.92 percent.

"It's not intended to be long-term capital,"

says Mark Thompson, the company's director

of governmental relations."It's to solve a short term

liquidity issue."

Moneytree, he says, doesn't yet have a lot of

experience with the lending program it markets

as "Express Business Loans."

"We don't know if it's going to be a viable

product or where it will head," Thompson says.

"These days, it's harder for us to judge credit

quality. It's a bad time to be experimenting."

In years past, he says, Moneytree has done

a steady stream of business with owners of

small companies.

Some of them used the company for checkcashing

services, especially if their capital was

so thin that they couldn't wait three or four

days for a check to clear a traditional bank.

Others turned to the payday lender for shortterm

credit to meet payrolls while waiting for a

big customer to pay up.

The company's Express Business Loans

require a few days for approval after a principal

in the borrowing company files a one-page

loan application.

Moneytree Inc. apparently is pioneering

business loans among payday lenders.

A spokesman for the Community Financial

Services Association of America, a payday

lenders' trade group headquartered in

Washington,D.C., says the group knows of no

other payday lender with a business-loan program