Small business loan unaffordability complaints on the rise [Video]

Financial Services Complaints Limited (FSCL) data shows an uptick in business lending complaints from small business owners struggling to repay their loans. 

As more Kiwi businesses are falling behind on debt payments, Financial Ombudsman, Susan Taylor, is reminding small business owners to seek advice before applying for business loans as the protections afforded by the CCCFA (Credit Contracts and Consumer Finance Act) only apply to consumer loans.

“There is a significant difference between the obligations on lenders when lending to small businesses compared to consumers,” says Taylor. “Business loans are not consumer credit contracts and responsible lending obligations do not apply.

“A common issue in some of the complaints we are seeing is that the lending was allegedly unaffordable, and often a secondary issue is that the borrower considers the lender has not been fair in their response to hardship”, says Taylor.

“A business loan carries risk because a lender …