Rapid Business Lenders since 1969

Things That Predatory Lenders Do That You Should Avoid

There are many different lenders out there offering business finance loans in Toronto, some of them more trustworthy than others.

While there are certainly excellent and reputable lenders that take great pleasure in seeing businesses thrive and succeed, such as Rapid Finance Co, there are also a number of unscrupulous lenders who offer questionable financing terms and engage in predatory lending practices.

Here are a few things small business owners should be aware of to avoid falling for shady business finance offers.

Hidden Fees And Terms

Every loan will have a small print attached to it. However, there is a difference between terms and conditions and deliberately hidden fees and unfavourable terms buried in the fine print in an intentionally dishonest manner.

To avoid falling victim to such schemes, it is essential to carefully review all the documents and contracts before signing anything and to question every aspect of the small print. Ask as many questions as possible to clarify any aspects of the lending agreement, and consult with a financial advisor or legal expert to gain insights and identify potential red flags.

It’s crucial that you do this before signing on the dotted line so that you don’t tie yourself into an unfavourable financing arrangement that will undermine your business rather than help it.

Predatory Lending Practices

Unfortunately, there are unscrupulous lenders in the market who engage in predatory lending practices. They target vulnerable small business owners with deceptive loan offers designed to trap them in a cycle of debt.

Look out for lenders who use aggressive sales tactics and misrepresent loan terms to get borrowers to sign up. Lenders who put undue pressure on borrowers to take on more debt than they can afford should be treated with suspicion and caution.

Unsecured Personal Guarantees

One of the most dangerous tactics that unscrupulous lenders might use is to entrap business owners through unsecured personal guarantees for business loans. This means requiring that business owners put their personal assets at risk in the event of a default.

Although personal guarantees are frequently used in business loans and are acceptable in many cases, predatory lenders may use them to manipulate weaker borrowers.

It is important to be thoroughly aware of the implications of signing a personal guarantee and to carefully assess whether you can afford to attach your personal assets to repay the loan before being duped into an arrangement that could end up bankrupting you completely.

Here at Rapid Finance Co, we pride ourselves on offering business finance loans in Toronto with integrity and transparency. To sign up and find out more about the financing options we have on offer, contact us today.