Getting loan approvals from banks can be challenging, especially for small businesses. This can be due to a lack of financial history, low credit scores, or no credit score. When struggling with business finances, it can be tempting to accept any financial offer that comes your way. However, there are some red flags to look for when working with a commercial lender.
- Rushing you through the process. First, if you find that a commercial lender is rushing you through the process you should be wary. Moneylending is a complex and serious agreement, and the lender should take the time to go over all the details with you. If they don’t, they may have something to hide, or they are trying to trap you into an agreement as fast as possible. It’s one of the biggest reasons you should avoid a certain commercial lender.
- Excessively high closing fees. All loans have closing fees, which can include taxes, insurance, and attorney fees if applicable, and these fees are generally paid at closing. Some lenders will ask for all of the closing fees once, while others may add it to the loan. Either way, it is important to know what the closing fees are to avoid being overcharged.
- No thorough credit check. Finally, if the commercial lender does not do a thorough credit check, you should be concerned. Credit checks are important to know how much money you can get approved for, and if the check isn’t thorough, you may be borrowing too much for you to pay back.
Many businesses wait to seek out loans until they’re strapped for cash, and nefarious commercial lenders prey on this desperation. Rather than wait until you’re panicking to seek out a loan, there are many ways to have flexible credit on hand for an emergency, including having a credit line or business credit card. If you are interested in securing additional capital for your business, you can contact Aspen Commercial Lending and we can talk you through all of your options.