The payment processor Heartland Payment Systems Inc. plans to offer loans to its customers through a referral deal with Encore LLC, a lender that focuses on the hospitality industry.
Heartland, a Princeton, N.J., payments company, said Monday that it plans to aim the loans at small and midsize businesses and will offer annual interest rates that do not exceed 30%. Companies in this market segment must often pay as much as 100% "for nontraditional loans and cash advances," it said.
In the past Heartland has refused to give referrals to lenders that charge interest of more than 30%.
"We have seen predatory lending rates at greater than triple what Encore is guaranteeing to our merchants," many of whom "feel they have no choice but to accept these existing usurious short-term lending products," Sanford Brown, Heartland's chief sales officer, said in a press release.
