When it comes to borrowing money for your business, you definitely have certain rights that you need to ensure are met. In fact, The Responsible Business Lending Coalition has developed a “Small Business Borrowers’ Bill of Rights” outlining exactly what those rights are. Of course, know what your rights are, and knowing what they actually mean should happen, are two very different things. The Coalition does a great job of outlining the rights and what they mean here.
Small Business Borrowers Have Rights?
While it may seem like common sense, it is a relatively new concept that borrowers have rights when it comes to financing. In the past, all borrowers, especially those with lesser credit, had to settle for whatever they could get, and lenders could basically dish out whatever they wished. Some still do. Borrowers do not have to stand for this, however, as they can search for lenders that uphold this Bill of Rights and accept their portion of the responsibility.
Lenders Have Responsibilities?
Yes! Implied in this “Small Business Borrowers’ Bill of Rights” is the idea that lenders have a responsibility to the borrower, several responsibilities actually. Lenders should make certain that all terms and rates are transparent, all fees are out in the open, or not “hidden,” and everything is written in plain English.
The idea is that not all small business owners have a degree in finance, and therefore they may not understand all of the formal financial terms in their debt agreement. It is the borrower’s right to understand everything they are agreeing too, and it is the lender’s responsibility to present it in a way that makes this possible.
So What Are these Rights?
The Bill of Rights are many, but the heart of the matter is borrowers have the right to completely transparent information presented in a clear, understandable, and written format. In addition, borrowers should know that they are not being caught in a debt trap, but rather that the lender will profit from their success, as opposed to their inability to pay.
There should be no guessing as to what is owed, when it is due, and what will happen if payment is not made as per the agreement. There should also be no promise or possibility of further credit if current commitments cannot be met.
The Gray Area
While borrowers definitely have rights and lenders definitely have responsibilities, the road goes both ways. Borrowers should not depend on lenders to tell them how much debt they can afford, and lenders should not be responsible for borrowers that choose not to read the information they provide.
The increase in irresponsible and unethical lending is rampant however, and this Bill of the Rights offers reasonable guidelines for what borrowers should be looking for from a lender, and what responsible lenders should be offering small business borrowers.
Biz2Credit offers an extensive network of responsible lenders, and we are dedicated to matching small business owners with the one that best fits their needs. The company’s small business loan experts can guide borrowers through the process, explaining what happens every step of the way. Visit Biz2Credit.com today for more information.