Excerpt via THE BUSINESS JOURNALS - "Imagine starting your new business and going online to take out a loan. You find what you think is an attractive yearly rate of 9 percent. You think you are set until — after you sign — you are shocked to realize it’s 9 percent per month.
These kinds of soul-crushing predatory loans can put you out of business, sometimes before you’ve even started. Millennials, in particular, can be susceptible, as they are most likely to go online to search for a loan.
If you Google “small business loans,” ads for several FinTech lenders pop up even before the U.S. Small Business Administration’s (SBA) site. One lender offers loans from $15,000 up to $2 million, while another seeks customers by promising they can “get funded as fast as 24 hours.”
Some lenders condition their loans on switching to their merchant card-processing service, then add excessive fees to every transaction and subtract their payment from every credit card sale, eroding profits. Others charge interest rates north of 50 percent annually.
Another red flag is the prepayment terms. Often, these loans have a prepayment penalty equal to the sum of the remaining payments. So even if you pay it off early, you pay all of the interest and fees that would have been paid off if you made the scheduled payments."
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