Research Can Help Stop Businesses From Falling Victims Of Predatory Lenders Opinion

Small businesses face challenges every day and the holiday season is no exception.

With the stress that accompanies the holiday season, some small business owners are becoming vulnerable to predatory lenders who target them with loans that sound too good to be true. However, there are many resources that small business owners can access to make sure they don’t fall victim to a predatory loan.

As with any loan, research is key. For example, before applying for a loan, a business owner should research current interest rates to get a good idea of ​​what to expect. If a lender offers something too high, that’s a red flag. Additionally, predatory lenders often promise one type of loan or a certain interest rate, but then give the business owner a different loan or higher interest rate. Sometimes the higher interest rate will not go into effect until a few months after the start of the loan.

While tempting, if a lender promises to extend an offer without checking the credit history of business owners, stay away. Credit checks are used to assess the owner’s ability to repay the loan on reasonable terms. A lender who avoids this step may offer a loan that the business cannot afford and lock them into a cycle of debt.

Other warning signs include excessive fees, rushed approval of documents, lump sum payments, unsolicited offers, prepayment penalties, and offers to help set up automatic payments from the account. bank of a borrower.

For many, owning a small business is the ultimate American dream. Even though there are predatory lenders, many reputable lenders offer reasonable loans. By researching and contacting organizations like the Rural Affairs Center, getting a loan that works for them can turn their dream into reality.

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