The world of small business financing can be a confusing place, and why wouldn't it? Considering about 90% of what you read online pertaining to small business loans is misleading, inaccurate and flat out wrong. Whether it's determining the payments on a business term loan or finding out what a factor rate means, learning about all the options can be overwhelming and frustrating. And these days, scouring the internet blindly in search of small business funding is the equivalent to jumping into a shark tank with a cut on your toe.
Many small business owners these days are choosing instant gratification (7 second business loans) and getting burned in the end. Folks, don't fall for the nonsense! Many online small business loan lenders are making funding offers and issuing contracts "before" underwriting just so you'll stop working with other small business lenders, often times killing the deal after underwriting at the moment you think your loan is being funded. Between inexperienced brokers intentionally trying to bury you in debt just so they can have a big payday, lenders making fake offers on loans that will never fund, and the internet plagued with inaccurate and misleading small business financing information steering you down a dark, dangerous path; you can't imagine the nonsense that goes on. We see on average 1-2 small business owners weekly coming to us either begging for help because they are stacked so high on merchant cash advance loans, or asking us if we have any advice before they file bankruptcy.
I needed capital to grow my business, and all I got was a destroyed credit score and an 87 clunker. When did small business finance turn into a flea market environment being pitched used cars and cash advances from Tommy 2 Thumbs?
Seriously... If you needed a heart transplant, would you call your local butcher? If you needed a cavity filled, would you call your local auto mechanic? If you needed a babysitter to watch your newborn, would you hire the guy on the corner holding the sign, "will work for food?"
If you own a small business and have searched online for a small business loan, or spoken with loan brokers, the chances that you have heard the following lines are pretty good. "It only starts out as a high interest rate, then automatically lowers in a few months." "Sign this funding contract and we'll refinance it to a much lower, monthly payment with a low APR next month." "Sign here, we'll fund you in a few hours at a higher rate, but it switches into a term loan with a low monthly payment at 6% after the 3rd month." "Sign here for the full funding amount, we'll give you half the capital and the remainder in a few months." We could tell you more "one-liners" but you get the drift. Perhaps, you have even been a victim of the nonsense above?
The Three Card Monte is also known as find the lady and three-card trick – is a confidence game in which the victim, or "mark", is tricked into betting a sum of money, on the assumption that they can find the "money card" among three face-down playing cards. It is the same as the shell game except that cards are used instead of shells. In its full form, three-card Monte is an example of a classic "short con" in which a shill pretends to conspire with the mark to cheat the dealer, while in fact conspiring with the dealer to cheat the mark. The chances of a mark winning are almost nil against a skilled con artist. Sadly, there are a lot of similarities to the Three Card Monte and the tactics being used in the small business loan industry.
Folks, it is shocking what some funding companies & brokers are misleading business owners with, and it's even more shocking that business owners are putting the future of their business in the hands of strays they find over the Internet. There are thousands of funding companies and loan brokers who will tell you anything you want to hear to close a loan, and they could care less about burying you in debt, or putting you out of business. Small business financing has morphed into the same model as the mortgage industry a few years back, and look what happened there.
- Do you know what the level of education is needed to offer small business loans, merchant cash advances "MCA's" and other small business funding products? NONE
- Do you know how many certifications are required to offer financing advice? NONE
- Do you know how many courses are needed to work at a funding company? NONE
- Do you know how much regulation is behind the small business loan industry? NONE
- Do you know that many of the workers at small business funding companies giving you small business finance advice, were hired off Craigslist and don't know a single thing about business, and/or finance?
The MCA business and online small business loans has grown tremendously since 2007, when the recession led banks to cease lending to small businesses almost completely. As with many business phenomenons, the potential of this unregulated profit source encouraged countless irresponsible and unethical providers to advance as much capital as possible, regardless of borrowers’ demonstrated ability to repay. These deceitful lenders held business owners to exorbitant interest rates and used contracts riddled with vague clauses and hidden fees. From telemarketers blowing up your phones, loan brokers harassing you, non-stop social media posts, postcards arriving in the mail, flyers landing on your desk, banner ads flooding your search engines, pop ups appearing on every website you visit and emails flooding your inbox. All promising the lowest rates, best terms and instant pre-approvals for hundreds of thousands of dollars simply for having a pulse. These days, you can't get away from all the small business loan offers if you tried.
Years ago, it was near impossible for a small business owner to access capital. Today, it's literally being forced down their throat. Small business owners have caught on; some are playing the system and some have fallen prey to this model. On the flip side, many small business owners must be held accountable, as they have willingly accepted more loans and MCA's then they can handle. Another problem arose out of this, and it's called stacking. If you’re unfamiliar with the term, loan stacking is where a loan or cash advance is approved on top of a loan or advance that is already in place with similar characteristics and payback terms. While many business owners may have not heard of the term, there are a number of negative small business loan stories that can be attributed to stacking.
Here’s how it happens. You accept a small business loan or merchant cash advance from a reputable funding company such as LVRG. Let's say for example, LVRG is able to secure $100,000 in small business funding. A UCC filing is made typically with the office of the secretary of state where your business is located. This may happen with a loan where there is a security interest, whether it’s from the bank or any other lender. The filing basically provides notice to the world that your business has existing debt.
A second lender, who you don’t know and likely have never spoken with before, buys your name off a list, and/or sees the filing (because it’s part of the public record), then calls to say, “I see you just got a loan or merchant cash advance, but we can get you more money at a great rate. Could you use a little more? We could offer you an additional $25,000 right now.”
If a business owner says “yes” to these offers, sometimes multiple times, it could create a situation for the small business owner where he or she will struggle to repay the loans. This is not only a major problem for the small business owner, but it also increases risk for the first lender. We have seen as many as 11 MCA’s stacked up on top of each other. Look at it like this, if your margins are 20% and you are paying 200% in multiple MCA’s, how long do you think you’ll be in business? A house of cards has been built, not only for the business owner, but for all the lenders in the line-up.
Unfortunately, there are lenders out there whose entire business model is based upon detecting recent loans made by a first, credible, lender, and then attempting to stack one of their loans or merchant cash advances on top of the original loan. Frequently, these lenders are familiar with the underwriting model and approval process of the first lender and thereby can guess at the creditworthiness of the borrower. Basically these predators are capitalizing off of the diligence of the first lender—and significantly increasing the risk to the small business and the original lender by adding additional debt. They do this because there will be a percentage of business owners who are actually able to service the debt, but there are many who can’t. Often times, small business owners are nearly forced to continue to accept more MCA’s, just to pay for the one underneath it. Hence, creating a ponzi scheme upon themselves. To the lenders defense, countless small business owners are also playing the system and putting lenders in severe strain due to an obscene amount of un-collateralized defaults. Some lenders, have closed up as well...
Many reputable lenders are opposed to these practices and have an anti-stacking policy, but that doesn’t seem to phase many other lenders, or small business owners alike. A responsible lender ensures that a loan is appropriately sized according to a business’s performance and ability to repay, and that the loan is an appropriate fit for the intended use. It is important to note that stacking is different from using the proceeds of a second loan to pay off the balance of a first loan in order to acquire additional funds. In this case the second lender can evaluate whether or not to approve the additional debt, and the balance on the first loan is completely repaid. This is a responsible way for the borrower to acquire additional funds if needed. It enables a legitimate approval process to take place before a second loan is approved, and prevents a borrower from taking on an unsustainable debt-burden. Loan stacking is a bad practice used by unscrupulous lenders and puts businesses at risk of default and bankruptcy.
Obtaining capital for your business is not about finding the most amount of money, it's about putting the right amount of capital to good use and growing your business. You can't grow, if all you do is owe. Just because you find a lender who is willing to bury you in debt (and there's plenty of them out there that will be happy to), doesn't mean you should let them do it; or do it to yourself for that matter. It's astonishing how many business owners call us daily, complaining about how much debt they are in from small business loans and merchant cash advances, yet walk from realistic financing offers in search of the highest funding amount they possibly find. One minute these folks are complaining about the level of debt they're carrying, then go on a wild goose chase in search of the highest loan amount they can possibly find, which just buries them in more debt.
At LVRG, we’re always striving to offer the best client experience, whether that’s by helping you find the best small business funding at the lowest rate or just answering a question about cash flow. We are committed to building client partnerships, and the funding model of our firm is built around this principle. We connect business owners with funding opportunities that match their specific industry. LVRG specializes in securing funding opportunities that complement the needs of small and medium size businesses. We offer the best terms available in the industry, an easy application process, and rapid approval times. LVRG offers niche financing in a large array of categories. Our advisors are knowledgeable about the intricacies of each client's industry. LVRG is a real small business funding company, and we’re doing big things for small business.
By working with you directly, we get to know both you and your business, from your short-term needs to your long-term goals. That way, we can create a funding option that works best for you. And by teaming up with LVRG, you know you’ll have a partner that’s committed to providing a superior borrowing experience. In order to create that experience, we emphasize how important it is that you’re able to not only borrow right away, but, more importantly, the right way. Some of our competitors talk a lot about how fast they can get you money. Sure, speed is important, but it’s hard to get to your destination quickly if you don’t know the right way to get there. We work with you to figure out the right-sized capital for your business. Our funding is fast, but it’s also thoughtful and affordable.
To find you the right-sized loan, we don’t just plug your information into a computer and let it make all the decisions. We enter into partnerships with clients, and our approach to success is to connect small business owners with appropriate funding. We provide guidance and share our knowledge of the industry with every client. We are not merely brokers; we strive to promote the careful maneuvering of the lending landscape to every entrepreneur. We strive to assist in the building of your business, and we do this by not leaving you adrift in the lending arena. LVRG endeavors to build client relationships that last beyond a one-time small business loan. We provide consultants who understand how to fit entrepreneurs with the products that fit their business and not the products that most benefit our firm.
We combine data-crunching software with a human touch to come up with affordable funding solutions that best fit your needs. LVRG is a team of the right people working with the right data getting you the right-sized funding for your business. At LVRG, we believe we are different from other lending firms. We never set out to be the biggest, but we do strive to be the best. Our deep sense of integrity, professionalism, and commitment to the spirit of entrepreneurialism propel our determination to provide assistance to small business owners in a challenging economic climate. Call (855) 998-LVRG or click below.