top of page

Predatory Lenders Fleecing Small Business Owners

Updated: Mar 20, 2023

Every couple of years a story breaks about how some person or company has found a new way to swindle the unsuspecting. I remember the good Baptist, Bernie Ebbers of Worldcom, fleecing investors and employees, my sister-in-law included, out of billions. I was working on Wall Street and incredulous when the Madoff story broke. However, the other day I came across one of the most disturbing articles I have read in some time, and I include the story of Martin Shkreli aka #PharmaBro, Turing Pharmaceutical’s insolent CEO who tried to jack up the price of a life saving drug from $13.50 to $750. Before taking the helm of Turing, he was a trader. I still remember the day he walked onto the trading floor at RBC (Royal Bank of Canada), landing just a few desks away from me. Less than 10 days later he was shown the exit after he lost what some insiders said was a hefty $2.8 million.

This Bloomberg article highlights an abhorrent practice that makes use of an arcane law where disreputable loan companies can and are destroying small businesses, seizing bank accounts and assets in as little time as a day, in some cases when a payment has not even been missed. The antagonist followed for this story is David Glass, the CEO of one of the most aggressive predatory lenders, Yellowstone Capital LLC. Vin Diesel’s character, Chris Varick, the ringleader from “Boiler Room” was based on Glass’ earlier career as a stockbroker. Looking back on those heady trading days, and the characters on our trading floor, I cannot believe that I actually left my wallet on my desk unattended at times.

The business of supplying short term working capital to small businesses has expanded exponentially in the last few years as we have seen everything from crowd funding to short term, high interest loans secured with inventory and accounts receivable from the likes of On-Deck and LendingTree. On-Deck announced in its last earnings call having reached a record $10 Billion in loan origination. ( According to the SBA, 73% of small business in the US used some sort of financing in the last 12 months.

Immediate capital for inventory or payroll can seem like a life preserver. For commercial fix & flippers, the access to hard money has allowed many to grow. However, many lenders have fees that are not so transparent and the structure of interest payments may be an unpleasant financial surprise. Do your research. Don’t make a decision based on the interest rates marketed on a website – find out all the fees, the structure of the repayment plan and the penalties for missed payments and extensions. The best scenario: Find a lender who is a partner in your success.

Evan Shweky is an attorney and the Managing Partner of Delarosa Lending Group, LLC, an asset based lender for Fix & Flip and Fix to Rent real estate projects. He is a regular speaker and mentor on topics related to real estate investment and negotiating. He can be reached at

41 views0 comments

Recent Posts

See All
bottom of page