Business owners in Texas and in particular the greater Houston metropolitan area including Galveston Island and Montrose need capital to grow their enterprise. Online lenders are providing new and innovative opportunities for small businesses to be able to borrow money to get off the ground or to expand. As Forbes reports, these online lenders are "poised to transform how small businesses apply for and get credit."
The problem is, both online and local lenders sometimes do not behave in an ethical and honest manner when providing loans to small businesses. Information hidden in fine print, surprise fees and unexpected costs are hallmarks of online loans given to many new companies and start-ups. Not only that, but both large and small banks have also been guilty of deceptive lending. Because of the risks associated with getting into a bad loan, business owners are encouraged to consult with a business law lawyer in Texas to review loan paperwork and documentation before an agreement to borrow money is made.
Could a Small Business Borrowers Bill of Rights Benefit You?
Having a lawyer review your particular loan documents is one of the smartest ways to ensure that your loan is a good form of debt that will have a positive impact on your company's ability to succeed in the future. Investing in the business is good, even if this sometimes means having to borrow over the short-term. However, you don't want to be trapped in a loan that is likely to lead to significant financial pressure and make success difficult.
Forbes suggests that there should be better safeguards in place to protect small business borrowers. In particular, Forbes puts forth the idea of a "borrowers' bill of rights" that would impose certain requirements on lenders and protections for buyers. For example, the bill of rights might guarantee:
- Borrowers have the right to have all of the terms of the loan disclosed in plain site. Some contracts contain clauses buried in the fine print giving lenders the authority to change many of the terms at any time or for any reason. This is grossly unfair to borrowers, who deserve clear explanations of total costs of the debt they are taking on including how much any brokers fees are.
- Borrowers have the right to comparison shop. Many loan salesmen and brokers get paid only if deals close, which means they may push customers towards high-risk loans and high-price debts and they may discourage questions or research that could cause a consumer to change his mind. Borrowers shouldn't be subject to pressure to make quick choices and they should always ask lots of questions about the loan terms so they can compare the loan they are being offered with other small business loans.
- Borrowers have the right to a fair interest rate. Lending to small business can be riskier than lending to consumers, and lenders routinely charge very high rates for businesses that need to borrow. You deserve to know what your interest rate and APR will be so you can decide if the loan makes sense or not.
If a borrowers bill of rights protected these rights of small businesses, it would be less stressful to take on a business loan. Because there are no such comprehensive universal protections in place, it is very important to talk to a business lawyer before you commit to any debt.
Contact a business law attorney if you believe your organization needs help. Call Brewer & Prichard P.C. today at 800-445-8710 or visit https://www.bplaw.com to schedule a consultation. Serving Texas and in particular the greater Houston metropolitan area including Galveston Island and Montrose.