She made the tough decision to sell her property to save her business that was on the brink of collapse because of mounting debts to the Australian Taxation Office and suppliers.
To pay the ATO and creditors, the business owners get desperate and sign up to contracts they don't understand and that land them with hundreds of thousands of dollars of more debt. Stephen Jones says the federal government has given ASIC greater power to take action against lenders doing the wrong thing.He says the government has given corporate watchdog, the Australian Securities and Investment Commission , greater power to take action against lenders doing the wrong thing.
Gavin Waring runs a company called Your Business Angels, which offers small businesses tax advice, and says he often meets business owners when they are in over their heads with debt and suicidal."2005 was a tough year, I had three suicides in a row in two weeks," he says."This will kill people. I'm serious, this will kill people."
And he says they are being preyed on by small fintech lenders, which target vulnerable people using slick marketing. "But because they've got an ABN, because they're in a partnership, they're a sole trader and a company, it's open slather — there is no legislation that controls the interest or how they're charged for this money."The biggest problem is that small business owners like Ms Li are in a rush to get cash to pay off debts owed and don't understand the contracts they sign come with exorbitant interest rates and fees."It was just too much interest.
"So you can imagine what situation I have left her in as well. My wife's not very happy, but she's very supportive. So once the house goes, the kids will be sad, because it's the family home."Those in the building and construction sector are common victims and among the worst hit in terms of insolvencies.
In November, ASIC warned that desperate Australians struggling with the cost of living were being taken advantage of by loan sharks whose small, high-interest loans were pushing them into dire situations.