Who’s Your Lender?
Online lenders have grown dramatically over the last few years lending to consumers who can instantly get large sums of money by simply filling out a few online forms. These firms aren’t regulated like banks so state and federal officials are looking to take steps toward changing that.
These firms primarily offer term loans, lines of credit, and receivable based financing. Although it sounds like business lending, these firms aren’t really lending to your business they’re lending to you individually. You personally guarantee the agreement.
The Consumer Financial Protection Bureau has asked borrowers to alert the federal agency of any complaints they have about these firms and act as a consumer watchdog. While many of these firms are legitimate company’s offering a much needed product and service, some are not.
Always read the fine print. Some clients obtain funds without fully realizing the interest rate they are paying or the scope and term of the agreement. Some agreements require monthly payments, or payments based on daily or weekly revenues. Some firms even required access to your business bank account to sweep funds on a scheduled basis.
Before you sign on the dotted line research the lender thoroughly. And remember…. if it sounds too good to be true, it probably is.
By Jack Stieber – President – American Receivable