Also………..” The Fed also discovered that denial rates for companies seeking microloans were higher than for companies applying for larger loans in the past year.”
So what does this all mean?
- The transactional costs of lending are disproportionately higher when the loan amounts begin to decrease.
- Banks are taking less risks. If you think about it, they’re taking more risks because their loan portfolios are not diversified.
The fees on payday loans make sense b/c the risk associated with these loans are higher. I think every payday lender would like to borrow money from the Federal Reserve at 1.5%, but we can’t.
Read more at Inc. Magazine.
