Donna Genie (Donna Bordeaux) explains that many online lenders aggressively market short-term business cash loans, which can be tempting but risky. She warns that some lenders (e.g., Kabbage) front-load interest—making interest for the entire loan term due up front—preventing beneficial prepayment. She cautions about hidden, very high interest rates (she cites seeing 48% and 52%) and advises speaking with a professional before taking such loans; she offers to consult and lists pyopaccounting.com.
Questions this video answers
Kabbage
48% and 52%
Chapters
If you're like most business owners, you're probably getting offers daily from places who want to give you cash or give you loans. These are pretty common nowadays. The Internet makes it very easy for immediate access to cash, the immediate fulfillment of a need. They can be very tempting. Sometimes they can be a great lifesaver, but other times they could be the noose that hangs you. So watch out when you're dealing with these loans. Many have very high interest rates and most, like Kabbage, will front end load the interest. So, for example, if you take out a loan today, all of the interest throughout the entire term of the loan is considered due immediately. You cannot prepay that loan or pay it off when the cash comes back in without paying the interest on the entire term of the loan. Also check out what the interest rate is. Sometimes these interest rates are sort of hidden in their documents, and sometimes they're banking on the fact that you may be desperate for cash and not even look. Seen these before and some of them can be okay, but I've also seen 48, 52% loans. That's ridiculous. Don't fall for that. So if you have any questions at all about how these loans can help and make sure that you understand what you have to do to pay them off and satisfy them and the structure of those loans, please speak with a professional. I would be happy to talk with you and let you know if this is a really helpful thing for your business and talk to you about what you're going to do with the funds to make sure that it's a good use of your time and money. I'm Donna Bordeaux with pyopaccounting.com.
