{"id":12631,"date":"2016-05-12T09:10:10","date_gmt":"2016-05-12T15:10:10","guid":{"rendered":"https:\/\/www.barcodesinc.com\/news\/?p=12631"},"modified":"2016-11-28T09:22:34","modified_gmt":"2016-11-28T15:22:34","slug":"truth-serum-for-deceptive-lending","status":"publish","type":"post","link":"https:\/\/www.barcodesinc.com\/news\/truth-serum-for-deceptive-lending\/","title":{"rendered":"Truth Serum for Deceptive Lending"},"content":{"rendered":"

\"Truth_serum\"<\/a>Former small business owner and Heartland lending expert Damon Maletta has been an advocate for merchants seeking loans. He penned the article \u00e2\u20ac\u0153What to Know Before You Owe,\u00e2\u20ac\u009d reviewing and rating financing sources available for small businesses based on speed, transparency and risk. He also shared his own personal experience when trying to secure a loan as a business owner. His lending story is a cautionary tale on how to detect deception when partnering with a merchant cash advance (MCA) provider.<\/p>\n

To add to his wisdom and excellent tips, here\u00e2\u20ac\u2122s how you can avoid putting your cash flow and business at risk with an MCA. Be aware that hiding the true costs of their offerings and repayment terms is a reoccurring issue with MCA providers. Many will even modify the terms of a loan midstream.<\/p>\n

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Understand Interest and Fees<\/strong><\/p>\n

MCA providers tend to charge more to borrow money than traditional banks. To make their offerings more appealing, they don\u00e2\u20ac\u2122t use the word \u00e2\u20ac\u0153interest\u00e2\u20ac\u009d and choose the not-so-clear term \u00e2\u20ac\u0153cents on the dollar\u00e2\u20ac\u009d (or C.O.D.) instead.<\/p>\n

Here\u00e2\u20ac\u2122s an example:<\/p>\n

Cents on the dollar of $1.44 means for every $1 borrowed, you pay 44 cents interest, or 44 percent. However, the C.O.D. is often not the only cost incurred. If you\u00e2\u20ac\u2122re seeking a $25,000 loan, you likely won\u00e2\u20ac\u2122t receive that amount because origination and application fees are taken prior to funding. You\u00e2\u20ac\u2122ll receive $24,000 total, but still pay the same interest you would on the full $25,000. The deception lies in the undisclosed origination fee when the loan offer is presented.<\/p>\n

You Must Qualify First<\/strong><\/p>\n

You should still submit an application with any MCA provider you\u00e2\u20ac\u2122re considering. Lenders don\u00e2\u20ac\u2122t typically provide a quote without first checking your credit, so while it might result in some unwanted cold calls, it will benefit you in the long run. Also, work with several lenders to ensure you get the best deal possible.<\/p>\n

Beware of the Number Game<\/strong><\/p>\n

A common tactic of MCA reps is to sway you with rosy figures, often out of context. If fast-talking and number-spinning begins, immediately ask to have all those percentages and points put into clear context: \u00e2\u20ac\u0153OK, you said 15 percent, but 15 percent of what exactly?\u00e2\u20ac\u009d It\u00e2\u20ac\u2122s their job to sell you, but yours to keep them honest.<\/p>\n

Questions to Bring Out the Truth<\/strong><\/p>\n

If the MCA provider you\u00e2\u20ac\u2122re considering doesn\u00e2\u20ac\u2122t clearly answer all your questions, this is a huge red flag, as you don\u00e2\u20ac\u2122t want any surprises after you sign the contract. Your best bet in this case is to look for a different financing option. Here are some questions to ask:
\nPre-application<\/em><\/p>\n