Finding the right loan to secure the capital you need for business growth can be challenging – and dangerous – if you don’t know what to look out for. It can be easy to be blinded by the promise of future success when trying to grow your company. But as you embark on your growth journey, there are some items to be aware of.
If you’re looking to secure a business loan, you should know the red flags to look out for. Here are some ways to avoid scams while staying focused on your business.
Plus, stay tuned for next week’s blog about the loan agreements themselves! We’re here to give you honest and helpful information each week.
Five Red Flags to Be Aware of When Looking for Business Loans
Think you’ve found the perfect loan for your business?
Pause and make sure none of these warning signs have set off alarm bells before you sign your name to any contracts.
1. Unsolicited Contact
This red flag predates any contract signing but should stop you in your tracks nonetheless.
Cold calling is not a common practice among business lenders. If you’re contacted out of the blue without having filled out any contact forms or other online sheets, then unfortunately it is unlikely to be a credible business lender.
Do you feel like the lender is not being flexible?
Or is insistent on one specific type of loan?
There are tons of options out there and simply no reason for a lender to be aggressively pushing one specific business loan. While it’s true that certain loans may not be realistic for your business, chances are you have more than one option.
3. No Testimonials
You’ll want to see some feedback before proceeding with any lender.
They don’t have any testimonials or can’t offer you any references?
Cross them off your list and move on.
4. Perfect Terms
As is true with most things in life, if it seems too good to be true, it probably is.
If their interest rate is much lower than others you’ve seen or they’re offering funds before you’ve given any relevant information (like about your business or how you plan on paying back the loan), you’ll want to run in the other direction.
5. Advance Payments
Asking for money upfront is a dead giveaway of a scam.
Regardless of how they explain the fee (paying for credit check, application fees, etc.) it’s not commonplace and you shouldn’t pay anything in advance. If a lender requests an advance payment, walk away quickly.
We always say trust your gut, but sometimes you may feel unprepared to make a call on whether a lender is legit or not. Use our expertise as leverage to make sure your business is safe from predatory lenders.
When you meet with Saddock Advisory, we’ll take a holistic approach to finding the best solutions for your business. We’ll walk you through the loan process and advise you on smart moves to grow your business.
We Make Better Decisions Our Business
We’ll connect the dots and help you put a solid strategy in place to help your company meet its goals. Want to learn more about how we can help you achieve your goals? Schedule a consultation today!