Here’s a common scenario that plays out across hundreds, if not thousands of times each day across the country:
A business applies for and receives a business loan, either in the form of a working capital loan or a merchant cash advance (with the latter being the better options for borrowers that have most of their transactions via credit or debit card).
After the borrower pays down at least 50% of their business loan – say, $110,000 of a business loan valued at $200,000 – they discover that they need additional funds. For example, they may need to hire additional staff, purchase more inventory, launch an advertising campaign, take advantage of an unanticipated – but lucrative – opportunity, and the list goes on.
Naturally, the borrower reaches out to the lender who provided the original business loan, and inquires about the possibility of obtaining more funds. The original lender checks to see that the borrower has paid at least 50% of the starting balance, and once confirmed, agrees to provide more funding.
EXCEPT…there’s a catch! And it’s about as big a catch as they come, which is why it’s so shocking that what we’re about to reveal isn’t common knowledge – but unfortunately, some lenders prefer not to advertise this detail.
The borrower who receives the second business loan will NOT have access to 100 percent of the funds! Why not? Because funds from the second loan will be used to pay down the balance owning of the first loan – but borrowers will still pay fees on EVERY PENNY of their (so-called) new loan!
For example, using the same numbers as above, a borrower who originally borrows $200,000 (loan #1), pays back $110,000, and then receives $200,000 more (loan #2) will NOT have $200,000 in their account and a total loan obligation of $290,000 ($90,000 for loan #1, and $200,000 for loan #2). Rather, they will have access to $110,000 – but they will pay fees as if they borrowed $200,000!
Is this ethical? Absolutely not! Is it legal? Unfortunately, for the time being at least, the answer is yes. And as long as that’s the case, many lenders are going to exploit their customers this way; especially customers who need access to the funds ASAP, and don’t have time to shop around and find a better solution.
However, we said many lenders are behaving in this unethical manner – not all lenders. And we’re proud that Mulligan Funding is in the latter category and a provider of funding who does not charge double fees.
In fact, to our knowledge, we’re the ONLY lending partner in our industry that doesn’t charge double fees on our loans. Why not? That’s easy to explain: because we want our customers to succeed. And double billing doesn’t just threaten this objective. Far worse, it damages the invaluable trust that we build with our customers.
Call Mulligan Funding at 855-326-3564 to discuss your financing options today!
The information shared is intended to be used for informational purposes only and you should independently research and verify.
Note: Prior to January 23, 2020, Mulligan Funding operated solely as a direct lender, originating all of its own loans and Merchant Cash Advance contracts. From that date onwards, the majority of funding offered by Mulligan Funding will be by Loans originated by FinWise Bank, a Utah-chartered Bank, pursuant to a Loan Program conducted jointly by Mulligan Funding and FinWise Bank.