5 Ways That Banks Unfairly Profit Off Of Business Loans
Business funding is a huge industry, and for the longest time, it was something that was almost entirely cornered by the big banking industry. Though times may have changed, banks still make a killing off of their lending business - and it actually hurts entrepreneurs in more ways than people realize. Here’s some of the worst ways that banks unfairly profit off of business loans.
- Late Payment Fees. Problems happen with every business, and that can mean that they end up having to pay the monthly loan amounts a tad bit late. For banks, this means extra cash. In some cases, paying off a business loan late can mean that a small business may have to have fees upwards of $500. Does this seem fair to you? Moreover, does this seem affordable? Application Fees.
- Application fees. Application fees aren’t dead, and though they usually aren’t all that pricey, it’s still extra cash in a bank’s pocket. Considering that only 1% of all loans get approved, it seems very unfair that they basically take all that money just to issue out a “no.”
- Risk Interest. Many businesses that are seen as high risk really aren’t, and banks do know that. But, the thing is that they won’t admit it completely. That would mean they would have to charge lower interest. By just being a first-time business owner, banks will call you “risky” and tell you that you will need to pay thousands more in interest fees. That isn’t fair, is it?
- Down Payments. A surprising amount of banks actually will go so far as to require people to pay a large portion of their loan in a down payment. This is standard practice, but what’s infuriating is that many business owners don’t have that capital to begin with. In order to avoid paying for the right to get more money, people will often end up doing something way worse…
- Collateral. They may end up putting up their home for collateral - and this is exactly what banks want. If you stop being able to afford payments, they won’t negotiate. Instead, they’ll foreclose on your home and business property. This leaves you alone, destitute, and homeless.
The bottom line is that banks are not your friend, even if they say they are. If you want to get the most out of your business funding journey, you need to look into alternative options - like merchant cash advances. Call NMS today to find out how you can save yourself some money, time, and headache.