BBB tip: How to spot predatory lending

MILWAUKEE – When interest rates are enticing enough to consider taking out a loan or refinancing a loan for businesses or consumers, BBB recommends researching the lender before committing any financial information.

The practices that make up predatory lending can involve any of the players in the loan market: lenders, mortgage brokers, real estate brokers, attorneys, even home improvement contractors. These schemes often target people who are "house rich, but cash poor" -- that is, consumers who have built up a lot of value in their homes, but do not have much available cash. A similar scenario could happen with a small business owner.

Consumers may get involved with predatory lenders in several ways. Some lenders or brokers use frequent advertising and neighborhood visits to encourage people to take out loans. Others target certain communities, through advertising in a specific language. They may also target neighborhoods with high numbers of elderly homeowners. Other predatory lenders may focus on small business owners without much access to credit.

Common Practices


    Important Tips

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        For more business information, see BBB.org/SmallBusiness.