Shutdown has ended yet some small businesses still struggle to move on

Small-businesses owners who want access to capital may turn to non-bank lending.

If you decide to go that route, you should be extra-cautious about the lender you choose and go over the terms and disclosures carefully, said Joyce Klein, director of FIELD at the Economic Opportunities Program at the Aspen Institute.

There are a range of products you can access online, from installment loans to lines of credit. And their terms may require daily payments through your bank account or take a certain percentage of merchant transactions.

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“You have to be very careful,” Klein said. “It can be not easy to understand how the pricing of the capital, the payment structure of the capital, the prepayment requirements of the capital, relate to your cash flow and financing needs.”

You may also face high financing charges, even if you pay off the loan ahead of schedule.

The risks of non-bank lending prompted the Aspen Institute and certain lending organizations to form a Small Business Borrowers’ Bill of Rights. The document lays out the rights borrowers should have and a set of practice standards for lenders and brokers. It also includes a list participating financial institutions.

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