Business loans can be a huge detriment to a business, but it
can also be a blessing. This blessing comes in the form of balance sheet debt,
and overall debt to make a business seem less profitable than it is.
Unfortunately, with many lenders knowing that businesses
take loans to increase their own business credit and to balance their sheets to
become profitable or more profitable than they already were, they can apply
strict pressure within some of their loans to ensure making as much money as
they can before the loan is repaid.
This can sometimes be through unreasonable interest rates. Since
lenders check every avenue and find out directly from business owners why the
loan is necessary, if they believe that it is for anything other than specific
investments that will bring in additional profit and the business is already
profitable, they are willing to gouge customers with interest rates much higher
than the loan is worth.
Often, business owners are unaware that this is the reason
why rates are so much higher on business loans with one lender than another,
and don’t shop around for additional rates. Those customers who do not look
around for other rates usually take a 20% loan out over a 10-year period,
pricing themselves out by year 9-10 depending on the lenders, rates and a few
In the end, this only damages the loan market more than it
helps them. We have had to sue countless lenders to fight against a rise in
interest loans that are not comparable to a standard loan. To make the
situation worse, this only continues and rises throughout the years.
The more trouble that a lender looks like they will be in,
the higher the interest rates and attempts to take hard working business owners
money away from them. That is why companies such as us exist. We will continue
to do what we can to dissuade companies from destroying business owners
One of the worst cases that we have represented for loan
fraud was for a business loan with a small enterprise. The company was small
when it applied and was accepted for the loan, with the repayments being a
reasonable rate to begin with. The issue was many of the illegal clauses in the
contract about asset and inventory seizure.
Like the previous business owner from a few posts ago, this
business owner had already established their business somewhat. While it was
not a massive business, it had proof of affordability for the loan itself, and
the application process had gone through a rigorous check. So, the business was
always going to be affordable for the lender, with repayment expected.
Unfortunately, one of the terms within the contract was that
if a repayment had come late, or the business owner asks for the possibility to
push a repayment date back by a month or two, then the loan company had the
right to seize the inventory of the business up to the value of the repayment
for that month.
Therefore, the loan repayment clause was very
unprofessional. If a business owner requests an extra month or two for a
repayment due to financial difficulties or stock not selling fast enough, to
punish them by taking the inventory that they would have used to make the
repayment profit at cost is so detrimental it takes months of repayment profits
away from that company.
Unfortunately, there is a second reason they had done this.
Knowing that the company would then struggle to make a profit the next month,
they continued this cycle of talking inventory at cost until the business was
no longer viable. Eventually, it fell into bankruptcy and the lender was able
to take the assets the company had owned. While we sued for the monetary value,
we could not do anything about the business owners’ reputation.
One large lender in the United Kingdom who is known for
being the worst pay day loan lender based on the way they treat their customers
contributed to one of the pay day loan cycles that financially crippled many
people throughout the years.
While some customers of a lender must take responsibility
for their actions during the period of loaning, sometimes it can be more
difficult to pay an original loan than first expected. This is especially true
in the case of those who have met unexpected expenses that they needed to pay
off in a short time.
Sometimes customers may experience a bereavement or another
problem that could cause a sudden expenditure in their financial lives. With
this, they will need to spend some of the pay day loan money that they had
initially borrowed to pay for these expenses, or they would need to pay for it
out of their pay check for that week or month. If the expenditure is necessary
and they do not have a choice this can make things bad for the customer.
Pay day loan customers face these issues all the time. They will have taken a loan for a specific amount that needs to be paid back by a specific time which is usually a month, at maximum two months. Then, they will need to pay out for an unexpected expense they cannot afford. In turn, this will set their financial status into a terrible position. If you are a business loans uk customer, this is worrying.
The issue is that once the late repayment fee has first
started, the fee is significantly raised. From there, it continues to go up
daily rather than weekly or monthly. This can quickly turn a £150 loan into a
£10,000 loan within the space of months like the famous case within the United
There is not enough regulation on the pay day loan market
yet. Hopefully this will change soon.
One of the worst types of lenders that you can come across
when applying for a loan of any kind are those who lie about the terms and
conditions of the loan itself. There is a reason that so many companies have
such horrible customer experiences. This is usually the case with pay day loan
companies, but despite the loan or the lender, there always seems to be a story
with specific lenders.
A client from Illinois had taken a personal loan to fund his
newly created real estate business, which he decided to follow alone. In order
to qualify for his loan, he had to take a personal loan against the two
properties he had already owned. While the rates were too good to be true with
a long repayment date, there was no reason for the home owner to be conscious
about how good the terms seemed to be.
Now, whether you blame the customer for his lack of
foresight or scrutiny against the contract that he was signing, this is still
an unreasonable clause within the contract. The contract had a clause which
started that within the first late repayment, if the monthly repayment isn’t
made within 3 working days, the client would lose all assets and legally seized
to the lender.
The issue isn’t the clause itself. It’s a fair clause that
many lenders use to ensure that they can recoup some of the losses they may
potentially make. But usually, this clause is reserved for customers who
default or fail to make a payment 3 months in a row. Considering this was the
clients first late repayment and there was a lack of communication regarding
this clause before they moved forward with the seizure of assets, it was by far
a smash and grab tactic by the lender.
They lost in court.
If you have come to this site, it is because you are as aware as we are of how bad some loan
companies are out there. Some of these companies love to take your money and give you no service back. Sometimes, they add large fees into your contract without telling you just so they can take more.
If you have experienced any issues with loan companies that have begun to kill your business, then you need to contact us today. We have experienced many customers troubles over the years, and we will go through some of the horror stories and testimonials of these customers.
If you need to sure your lender, then you absolutely should call us or email us today.
Some of the issues that I have seen with loan companies are their insistence in adding unreasonable or unaffordable fees hidden within the fine print of the contract. It is so key that readers know they are not told about these fees or hidden clauses within to the contract before they decide to accept the loan. That is why they end up bringing some businesses down into bankruptcy completely.
A lot of these companies are pay day loan lenders and they are usually based in the United Kingdom or America. I believe that is because there is a growing insurgence of small companies within these locations. As their small business industries are constantly growing, lenders spot what they would call “marks” and find the companies that are either desperately in need of cash or have a high cash supply with a small amount of profitability.
Usually the lenders will provide false hope or unrealistic targets to these customers, and they would lock them into a contract that sounds reasonable but is really designed to take as much money as possible from them within the next 2 years.
If you need to sure your lender, contact us today. We have dealt with many of these companies, and we know all of their tricks.