By: Jack Stieber
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When it comes to online business lenders, there are good ones and not-so-good ones, and it’s not always easy to tell the difference.
Business owners have more options available for financing today than at any other time in the past. In addition to traditional lending avenues such as SBA loans, community bank lending, equipment leasing, factoring, and asset-based lending, there are a large number of online business lending companies.
Not All Online Business Lenders are the Same
Online business lenders have mastered the art of being fast and easy. Business owners are often promised funding the same day they apply. A good rule to remember is “if it seems too good to be true, it probably is”.
Finding capital online is easy. But the actual “true” costs of the loan are often more difficult to understand. Confusing loan documentation, hidden fees, daily draws from the business’ bank account and the overall lack of transparency often puts a business owner on a treadmill of borrowing more money just to make payments.
We have talked to many business owners who fell prey to some of these online lenders. Stacked loans and being unaware that they personally guaranteed these loans and pledged all of their assets to the lender, can ruin a business. Annual percentage rates of 50% and higher have had many businesses in a death spiral. The OCC and many State Attorney Generals are investigating these companies in an effort to stop these usurious and predatory practices.
Considering an Online Business Lender?
Before committing, consider the following:
– Are the terms and conditions of the loan contract clear?
– Is the actual interest rate clearly stated?
– What is the payment schedule?
– Will payments be automatically drafted out of the bank account?
– Is there a grace period?
– What are the penalties and interest for a missed or late payment?
– Are there servicing fees or other miscellaneous fees?
– Is the lender filing a lien against my business?
– Am I personally responsible for the principle and accelerated interest?
For forty years we have known the value of fast funding for business owners. Emergencies happen, opportunities present themselves causing business owners to need more capital. At American Receivable, we often fund clients within 24 hours, however, we value clarity and transparency. We want out clients to have full disclosure regarding the transactions, collateral pledged and personal commitments before documents are signed.
Furthermore, American Receivable knows that the best business relationships start with full disclosure.
If you’re considering an online business lender to improve your cash flow situation, we invite you to call us at 1-800-297-6652 to learn more about our invoice factoring solutions.