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Predatory Lending Practices

Many companies, especially small businesses, require loans in order to continue or enhance their operations. They are often dependent on borrowing from large institutions in order to keep a positive cash-flow situation or to have working capital to buy materials, etc. Their position of needing these loans to survive puts them in a vulnerable position from many lending institutions. Banks sometimes take advantage of them with predatory lending.

Predatory lending is a dangerous activity, and one that many would say has contributed to the current economic situation in our country. Banks had made a habit of offering very attractive introductory terms for the financing of large loans, but they quickly escalated. They also made loans to people who were not qualified to receive them based on their credit history and income level, which led to many foreclosures and defaults.

Businesses can be involved in a variety of lending situations, whether it's a mortgage for an office space or a series of small business loans to maintain business operations. Part of the problem in the current economy is that small businesses can no longer get loans to keep their businesses going.

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It is important that businesses have legal counsel on their side to protect them from predatory lending and to make sure that banks live up to their end of a loan agreements. Small businesses especially can be in vulnerable positions because they need these loans so badly, so they need legal advice to protect themselves. For more information about lending, contact the Minneapolis lending lawyers of Skjold ▪ Barthel, P.A. today at 612-746-2560.