[nelaboras]

Three counterarguments:

- if the opportunity costs are high, would it nonetheless not be better to have fair rates?

- if you believe in the market, why are there not already offers with more acceptable rates? Is there just not enough capital (which seems wrong, if you believe in your own claim that it's so profitable to invest), or because the risk is so high?

- most importantly, even if 40% was in fact an acceptable rate, what happens to those that can't repay? Say your crop is eaten by a bug or the local militia steals your harvest or you get injured and can't do the work - what happens to a poor person with a 40% loan? The answer is eternal, ever growing, unrepayable debt and suffering.

No thanks. This is not a kind gesture, this is Russian roulette - two chambers: you get even, two chambers: you make an enormous and sustainable profit, two chambers: your family is in debt for generations.

[jacquesm]

Before figuring out what rates are fair you should take all the variables into account, the big one is probably the default rate. If enough of these small businesses go out of business the survivors will have a more difficult situation as well because their loans will have to make up the shortfall. A typical default rate for these kind of loans is 5 to 10%, that's a lot of principal losses.

[ancientworldnow]

Of course the default rate is artificially higher because only loans with high interest are available and a more widely available reasonable rates would likely lower those defaults.

[sukilot]

That is utter speculation.

[AlexandrB]

Seems kind of obvious. If expenses were lessened some of these businesses might be viable at a lower rate of profit. The only question is: how many?