What every Business Owner should know about (TILA) the Truth in Lending Act.
TILA, requires lenders to disclose information about all charges and fees associated with a loan. The idea is to create more transparency about how much is being borrowed, and under what terms. This year many states are expanding TILA to include commercial lending, leading to the adoption of consumer-like disclosure requirements that impact certain commercial loan origination platforms, including merchant cash advances, small business loans, and factoring.
Predatory lenders are leaving states that require this full disclosure of interest rates and fees. They know business owners will not accept the exorbitant costs, that up to now, they have hidden deep within loan documentation. Now all fees, interest rates and additional costs must be disclosed on the first page of the loan document.
This doesn't mean these lenders cannot operate in states enforcing TILA rules for Commercial Lending. Desperate business owners may still be lured into accepting financing with questionable and costly conditions.
Financing is of the upmost importance in ensuring business growth and success, so business owners need to start looking for financing options with enough time to be able to compare different lenders. Refinancing those high interest rate loans is another option many business owners should consider.
Because not all Business Loans are created equal.
Many times business owners discard a financial product because the terms and conditions don't seem to fit their needs. However, different lenders can offer the same type of financing with completely different requirements and interest rates. Lenders with large portfolios of financial products can help educate borrowers about their options. Because Fintechs offer technology and digital solutions that facilitate the process of applying for and repaying loans, they usually offer a more comprehensive one-stop platform.