Recently, Goodshuffle Pro teamed up with Stripe Capital to bring our clients fair, fast, and easy capital loans to empower their event rental companies. Loans can be invaluable tools in creating a thriving business, but only when used responsibly. A basic rule for accepting any loan is that you must be able to repay both the loan and any applicable fees and interest that come along with it, within the allotted time frame.
If a loan broker, bank, or company offers you a loan that you know you won’t be able to repay or insists on unreasonable repayment times, it’s a sure sign that something is wrong. While that may be an obvious “red flag” situation, there are many more signs of predatory lenders. We’ve compiled a few key warning signs to be aware of any time you’re considering a loan.
No Prequalification or Guaranteed Acceptance
The prequalification process exists to prove that you can reasonably repay a loan, without consuming your entire budget. It’s a necessary step for any responsible lender, and serves to protect all parties involved in the loan. The prequalification process may be different for each lender, but it should be outlined clearly so you understand what will and will not be taken into consideration. Any lender that guarantees acceptance is more than likely a predatory lender— avoid them at all costs. Think of it this way: would you lend a large sum of money to someone if you weren’t sure they could repay it?
It is important to note that, while a credit check and/or collateral are common practices for many loans, it does not have to be a requirement. For instance, Goodshuffle Pro’s Stripe Capital loan program doesn’t run a credit check or take collateral, but instead looks at your income with Stripe over a certain period of time, along with other factors, to determine if you can reasonably repay the loan within the repayment period. This prequalification process makes logical sense— and that’s a key factor to seek out when looking for a lender. If processes and requirements simply don’t add up, avoid the deal!
Unclear or Unreasonable Terms
If your lender cannot explain every facet of your loan in a way that you can understand, that is certainly a red flag. If the repayment period, interest, fees, etc. seem unclear, vary throughout different parts of the contract, or seem excessive, run away. Responsible lenders will not seek to trick you or encourage you to take on more debt than you can handle, as your success ultimately means their success.
Too Good to Be True
If something seems too good to be true, it probably is. Any time that terms do not line up, it is imperative that you figure out why if you choose to move forward— there’s probably a catch somewhere. We encourage you to walk away from those situations, as a fair loan will make sense.
No Website or No Physical Address
If you cannot find legitimate information about your lender, it’s definitely a scam. Reputable lenders will not only have a website with their physical address listed (plus ways to contact them), but also plenty of information about their loan offerings, loan process, and other financial programs. A lack of web presence should be cause for alarm.
Be Cautious and Skeptical
Common sense should be your co-pilot when seeking a loan for your event rentals company. If something feels off, something probably is off and you should definitely second-guess your decision to sign any paperwork. It’s also smart to shop around so that you can understand what is a legitimate good deal, what is a fair rate, and what is totally unreasonable and suspicious. Interest rates and fees change regularly, so you’ll want to gather information every time you seek out a loan, as rates may have changed. Ultimately, loans should help you reach your goals, not actively work against them. Be aware of predatory lending practices, what the current going rates are, and how much you can comfortably repay each month before you sign!