It’s a sign of the times. Bad actors are taking advantage of the desperate situation business owners are in. These predatory lenders get people into expensive loan contracts with little more than a signature. The effective interest rate is not usually clear and accumulates differently than a standard term loan, so the principal quickly becomes dwarfed by the burgeoning interest. Looking for help, a small business owner is pulled in by the easy process, not knowing the details of what the loan entails.
If you have small business customers or members who need funding, here are a few steps you can take to point them in the right direction.
- Encourage business owners to check with their current banker first. Many of the special loans funded now have streamlined application processes. If the business owner doesn’t qualify or needs extra help. Go to step 2.
- Make an appointment with a business counselor at either one of the Women’s Business Centers or Small Business Development Centers. If the business owner qualifies, a counselor can introduce him or her to step 3.
- Microlending is a safe alternative to predatory loans. The loan process can be handled online and through a phone conversation. Most microlenders have flexible lending criteria for business owners working on improving their credit and reshaping their business model to respond to the times. To find the right lender, complete the easy form on the Microenterprise Collaborative’s website.
One of the lenders working with the Microenterprise Collaborative has assembled an informative toolkit to help borrowers determine if an online lender is right for them. Check out the document below provided by CDC Small Business Finance
Download this helpful guide: 10 Questions to Ask Before Committing to a Small Business Loan