If it’s Too Good To Be True, It Probably Is… Ethics in LendingEditor
Every day, we talk to business owners that are in need of funds for a multitude of reasons. On that initial call, we ask what your need is in the way of funds and what you are looking to use it for. Once we have all of the information and documents required, we move forward in working with our underwriters to get you the best approval possible. There are times that we are not able to supply the full amount a merchant is looking for. While this can be disappointing, it’s important for you to know that, being a company with ethics, it’s in your best interest. Are there other companies that will provide you with the entire amount you’re looking for? Absolutely! Is that a good thing? Not always. Let me explain why.
In the article, “Considerations when Applying for a Cash Advance”, we shared what goes into the decision making of an approval. One of the things we take very seriously is the debt to income ratio. A respectable lender sees that you have a substantial percentage of your revenue paying loans, it’s irresponsible to approve a new loan. This only sets you up for failure. Biting off more than you can chew will only put a financial stranglehold on your business.
One of the things we pride ourselves on here is the relationships we build with you. Companies that offer more money than a business can handle isn’t in it for the long haul. What your lender should be looking to do is partner with you and your business. When you succeed, we succeed. So, while you may think funder X is doing you a huge favor, be wary. And if a lender doesn’t give you the full amount requested, don’t assume it’s a bad thing.
Let me give you an example: You’ve found your dream home. The cost is a bit more than you can afford. However, the bank looked at your income and expenses and while you would likely be strapped with the payments, you were approved you anyway. Because you so badly want this home, you’re excited and take the offer. You can make some sacrifices if need be. But, 6 months roll by when you come to the realization that the payments are nearing impossible. You’re having difficulty paying your bills and are at risk of losing your home. What started as a dream, ended in a nightmare.
Trust a lender, especially when they offer a good explanation, when they deny your initial request. Besides, know that there are options you may not have considered. For instance, should you receive “X” number of dollars, often, we are able to offer you an “add-on” amount a short time later. This allows you to allocate the funds you received, create a relationship with your lender, and receive more funds to carry you through the next phase.
Entrepreneurs want what they want, when they want it. But, I encourage you to keep in mind that what a company like ours is doing, is ensuring you succeed!