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Alternative lending is a great way to access quick capital for your business when traditional banking isn’t an option. But, as with any financial decision, it’s important to be aware of the potential pitfalls Whether you’re considering peer-to-peer or online lenders, here are some warning signs to watch out for before signing on the dotted line.

1. High-Interest Rates

Alternative lenders often charge higher interest rates than banks do because they take on more risk. Make sure you understand all the terms and conditions associated with any loan you consider and know what kind of rate you can expect in return for that risk. If it seems too good to be true, it probably is!

2. Short Loan Terms

Most alternative loans come with shorter repayment periods than traditional bank loans so borrowers have less time to pay back their debt. This means larger monthly payments which may not fit into your budget if other expenses arise unexpectedly during the life of the loan. Be sure to plan and make sure that whatever repayment schedule you choose fits into your current cash flow situation and doesn’t put undue strain on your finances over time.

3. Hidden Fees

Many alternative lenders will bury hidden fees in their loan agreements and repayment terms that can add up over time. Make sure to read through the fine print of any contract you sign and understand all of the costs associated with your loan before committing to it.

4. Poor Customer Service

Because alternative lenders operate outside of the traditional banking system, they may not have the same level of customer service and support as a traditional bank. Make sure to research the lender thoroughly before signing any loan agreement so you know what kind of assistance they offer if you need it in the future.

5. Too Good To Be True Promises

Alternative lenders may promise things that sound too good to be true, like quick funding with no credit check or no fees. Be wary of any lender who makes promises that seem too good to be true and make sure you read the fine print of all contracts before signing them.

By being aware of these potential pitfalls, you can protect yourself and your business from making a financial mistake when considering an alternative loan. Kenbry Capital is committed to transparency and providing tailored solutions for all of our clients. Contact our offices today to start working directly with one of our team members.