‘Do you need a loan?’

Have you ever gotten that call, or maybe you are like me and get 25 finance offer calls a day. And yes, it took me way too long to see the patterns of high interest and games with gotchya’ fees before I woke up and stopped feeling curious about any of them. For awhile I hung up on them. A few I really yelled at. I couldn’t take Frank’s vowing to remove me from their list only to Have Tom, Dick and Harry call me for the next 3 days.

Apparently, I am a slow learner because it took almost a year before I paid for the Robo killer app, or even looked for one, but that certainly has helped.

But here is the point:

On Deck, Kabbage, BluVine to name a few are focused on one thing: Businesses that have great cash flow to pay their 35++ points annualized paid daily or weekly juice loan.

How they can claim to help small business owners- which they all do- I will never know. Because clearly THEY. DON’T. They absolutely don’t unless you have cash to burn or simply the nature of your business is one where you turn over a lot of cash. Which might fit you or I, but is most definitely not what main street business experiences.

These kinds of funders have one simple goal: to take as much of your money as they can with their smooth double accounting speak said with a smile.

It’s no wonder On Deck is still not making money. Despite having loaned over 10 BILLION out, the rates they are charging business owners is simply too high. How else can you NOT BE MAKING MONEY when you charge north of 35% and collect daily or weekly from the business owner? With those kinds of margins your draining them dry and squeezing the life out of them, clearly.

I borrowed a short term loan on 3 separate occasions with On Deck, Kabbage and BluVin to see what I would find.

On Deck just charges a lot. It’s simply to get the money with them but super high-interest rate. 45% ish blew my mind. I think I borrowed 5K couldn’t get over the fee and closed the line.

Kabbage has this thing that if you pay back say 80 percent of the loan as fast as you can– because who wants to keep anyone’s money for very long at 35 percent- you can expect to pay the last 20% as you began. If you were paying 5K a week the last 20% would not spread itself out over the 6-month term you originally signed up for. Gotchya!

And BluVine, supposedly the King of business lines of credits was even worse. I had to report them to the BBB because they accepted a deal from a dishonest broker from: Premium Merchant Funding 55 Water Street, 50th Floor | New York, NY 10004 Tel: 646-780-8719 | Fax: 646-780-8724

Ben told me what I wanted to hear and then when I missed it in the contract BluVine refused to budge. I eventually got the simple interest loan I was promised with no exorbitant fee but it took my relentlessly complaining and filing with the BBB to get it done. I think when I told them next up was the SEC they just wanted me gone and waived $750.00 they tried to charge me to borrow $25,000 for 2.5 weeks.

What gets me is if they are charging me 35-45% what are they doing to new business owners? Or those with lower credit? Or fewer assets?

Depending on the day I have a 750 credit score- sometimes higher and sometimes a little lower- but in the same range. My husband and I have a good amount saved for retirement (mid 6 figures), our business is profitable, although we used its profits to invest in two other businesses and are now paying it back, we own one small home and have another mostly paid for.

We are not ‘rich’ but we also have demonstrated discipline. And On Deck, Kabbage and BluVine all wanted to charge me 35-45% interest when a bank loan is what 5%? But who can get those right?

And even if you can, they take so long to decide. Community banks are better for sure but so few are lending in general. You have to find someone who believes in you and that can be tough to find these days so there is nowhere to go!

And the trouble with crowdfunding is that it has to be something you want to do. If your business will benefit from building a crowd who believes in you, and you want them to invest in you at a fair price you set– and you also want them to tell their friends about you because they first were your customer too– it can be a beautiful love story. But crowdfunding can’t compete with a fast pay loan on face value. It requires investing time and money to market your business, build relationships and prepare it for investment. All worth it but you have to start 6-18 months in adance-depending on how much you need to raise.

So when you say: ‘Yeah, I could use a little extra cash for my business right now. Can you tell me in plain English what a loan from you is going to cost me and exactly when it’s due?’

Good luck asking that question.

For awhile I recorded the conversations because half of the calls I get are from New York and they sound like Tony from the Soprano’s. It’s just hysterical on some level how creepy some of these guys are that call. It’s like the alternative finance loan businesses have gotten together and said: ‘We don’t need to tell the truth. We don’t need to advertise. We can do whatever we want and charge whatever we want and the ones we give the money to need it badly and can pay it back fast and for a really expensive fee.

The most depressing are the ones who call you and ask you if you are in financial distress. Those surely make you feel like shit. Thank God I have learned to stand up for myself.

In my curious phase I would reply, ‘Well no, actually, I am leveraging resources I personally have to invest in my business. It’s called calculated risk buddy, which could be defined, I suppose as a ‘source of distress’ but I suggest you rethink your opening line when you are calling to offer me a death dose cocktail laced with short term liquidity.’

But now I just keep it simple and tell them to go crawl back under a rock if my Robot Killer hasn’t already helped me out there.

I have yet to do my homework but it appears Celtic Bank in Utah is associated with the 3 lenders I borrowed from. Usary rate laws by state offer lenders like this wide discretion in what they charge. I don’t know much yet about Celtic but if it’s true, this one bank is funding all 3 of them, something has to be done about this.

To your highest purpose and best self,

Lisa Canning: Linkedin

‘Do you need a loan?’

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