In the world of small business alternative lending, there are a few things to keep in mind to avoid becoming trapped in debt for years. Understanding how lenders earn income and knowing what to look for in a lender can help save tens of thousands of dollars.
It’s not uncommon to hear stories about alternative lenders that bait victims with the promise of low payments to be made at the discretion of the borrower. Those scenarios are created by the lender to keep a business in debt as long as possible. The longer you’re paying interest and not the principal, the longer you’ll be paying, and the longer the lender generates income. Avoid this at all costs! The goal is to generate income for yourself, not for someone else.
The most reputable alternative lenders operate differently. While they still earn income from interest, they limit the amount that can be made from each client by creating more realistic repayment terms of six to twelve months. By doing this, they create a definitive end date, at which point the borrower is free from financial obligations to the lender.
Alternative lending can be an excellent way to help an entrepreneur reach their goals. Just be careful about who you choose to borrow from. Contact only the most dependable lender in your area to learn more about the products and services that best suit the unique needs of your business today!