United States lenders are making financial services more accessible to small businesses by offering their credit options online. But sometimes, accessibility comes with strings attached. This recent article by the Wall Street Journal highlights some of the pitfalls small businesses encounter in the online lending market place.

Online lenders market to small businesses with the allure or instant cash and no credit checks – but inadequate regulation within the online lending marketplace enables finance providers to implement unprincipled business practices. From not disclosing interest rates to their customers up front, to convoluting their terms language, online lenders easily sneak extra fees and hidden charges into their contracts. And while their rates may seem low at first glance, the hidden extra fees add up. In the end, the borrower could be paying the equivalent of 9% to a staggering 97% APR.¹ Opaque contract language intentionally works to deceive small business owners, and borrowers could end up in a worse financial position than they were before their loan.² These unconscionable practices leave small businesses with no flexibility and no control over their financing processes.

States are beginning to take notice, and in response, are passing legislation which requires online lenders to disclose interest rates on small-business loans. But if your business is incorporated in a state that does not offer these protections, do your homework. Don’t fall victim to aggressive salesmanship or hidden costs. Choose a trustworthy lender who provides complete transparency to their clients.