::STRANGE BEDFELLOWS - On Deck Capital and the National Urban League (NUL) By Jim Clingman::
At first I could not believe it. On Deck Capital and the National Urban League (NUL) formed a joint venture to make loans in “urban” areas with high concentrations of “minority” businesses. As I read the details of this relationship I grew more and more disturbed at the relationship between these strange bedfellows.
The news release read as follows: “On Deck Capital will provide loans through Urban League local affiliates, starting in Philadelphia and Los Angeles and then expanding across the country
The program offers one-year loans ranging from $5,000 to $100,000 at interest rates of 18 to 36 percent. All the loans must be repaid through automatic daily "micro-payments" from the business' bank accounts..
To qualify, businesses should generally have between $500,000 and $2 million in annual revenue and have been operating for at least three years, said On Deck founder and CEO Mitch Jacobs.”
Is it just me, or can you also see the ridiculous nature of such an arrangement? Can you see, simply from the few lines in their release, how usurious these loans are? Can you imagine paying back a $100,000 loan at 18% - 36% in one year? And, you pay “micro-payments” on a daily basis, withdrawn directly from your checking account.
Please, if there is someone out there who can explain this, other than the crooks who are perpetrating this financial crime, I wish you would contact me and point the virtues of such a deal; I’d love to know. As we complain about credit card rates, which are similar to the 18%-36% On Deck Capital will charge our businesses, how can we accept this without the same outrage and indignation?
I don’t know what the Urban League was thinking, or if they were even thinking at all, when they cut this deal, but I do know they need to reconsider it. No, they need to cancel it! Can you say “loan-sharking”? Payday loans? Check cashing outlets? These boys have taken venture capital money, which goes out for as much as 35% and higher in some cases, and turned it into small business loans for the same interest rates. Check out their website and see for yourself www.ondeckcapital.com
It’s bad enough to see Earvin Magic Johnson on BET, dressed in his red polo shirt, as if he is a floor salesman, hawking Rent-a-Center. He says to Black folks who watch BET that they can rent a television for about $20.00-$25.00 per week, flashing his winning smile and suggesting how good a deal that is. Rent a TV for $100.00 a month? C’mon, Magic; you gotta be kiddin’ me!
You can count on exploitation and rip-off schemes being promoted to Black folks as sure as the sun rises in the morning. And, you count on us responding to these schemes as sure as the sun sets at night. That’s partly why they do it. Why are we so vulnerable? Why do our own people, our leaders, our celebrities bring this kind stuff to us? According to Forbes Magazine, Magic Johnson is worth about $500 million; surely our brother did not come up a little short and needed some extra spending money, so he went to work for Rent-a-Center.
Surely the Urban League, with all its experts and financial whizzes on board, is not hurting to the point of having to sell out to On Deck Capital. I cannot believe that someone at the NUL did not look at this deal and say, “Hey guys, this is not good for our constituents; let’s not do it.” I know the NUL cares more about us than that.
Disgusting, disheartening, and even sinful are terms I would use to describe this transaction – this relationship between these “strange bedfellows.” I am simply flabbergasted. During this economic climate, when we are suffering far more than most, when our businesses are struggling far more than most, when our families are hurting far more than most, and when we need more than ever to build a strong economic foundation, along come On Deck Capital and the National Urban League to the rescue. With friends like these, we could use more enemies.
This Faustian deal will debut in Philadelphia and Los Angeles, and then it is scheduled to roll out in Atlanta, Cleveland, Jacksonville, Chicago, New Orleans, Kansas City, and of all places, Cincinnati, Ohio, where I reside. Let the word go out to On Deck and the NUL, we don’t need this where I live, nor in any other “urban” area. We have quite enough exploitation going on against Black folks already.
Personally, when it gets to my hometown, I will be waiting “on deck,” ready to knock this one out of the park. What about in your town? Batter up!
Jim Clingman is a writer and professor. He can be reached at www.blackonomics.com
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