The news is everywhere on the internet; how online lenders are providing quick micro-businesses funding to all companies including those with bad credit but have steady cash flows. Yes, it’s true, web-based funding institutions are now giving cash advances to the broad group of small businesses that formerly found a difficult time meeting the criteria for business bank loans.
However, not all shiny-looking deals will mean golden offers. This kind of business financing is most times doubtingly ethical and very expensive. So how do you win a business cash advance deal without getting ripped off?
Many lenders in this new-fangled micro-business funding industry use three-digit interest rates which is a major red flag to watch out for. Plus, these predatory funders get away with such exploitation because there’s high demand for their lending services as traditional banks reject risky companies.
So how do you search cleverly and eventually get a business cash advance that’s not a scam?
About APRs
Scammers take advantage of your ignorance. If you can’t straight away compare whatever product they offer you with other market alternatives, then you have no yardstick to weigh up the deal.
Unlike bank loans, short-term loans and merchant cash advances don’t use APRs to come up with prices. This is simply because MCAs do not accumulate interest like loans do. In its place, Merchant Cash Advance lenders charge a fixed fee they expect you to settle in spite of how faster or slowly you’re paying off the cash advance.
And while a flat fee is easier to understand compared to interests, it also covers how expensive the funding is. Most times, it would take traditional banks years to accrue on you an interest similar to the flat fee an MCA charges. But there are ways to get an approximate APR for MCAs. With the APR you can put side by side products to see if the fee is reasonable or just a rip-off.
Check the Reviews
Find out what people are saying about different online lenders from reliable sources like formal reviews to compare the many providers in the marketplace and make well-versed decisions.
The more you inquire before signing up with a company, the less likely you will land in pressing debts.
Incentives
As far as online funding is concerned, incentives have to do with how willing the cash advance provider is to keep you as a loyal or repeat customer. You can tell this by their service quality, customer care and how flexible they are in terms of pricing.
Top business cash advance providers offer incentives to boost consumer loyalty. For instance, they can agree to reduce the flat fee if you manage to settle the debt early.
In a nutshell,
Take time to countercheck vendors until you’re confident you won’t regret the choice you’re making.