Among the worst cases that we’ve represented for loan fraud has been for a business loan with a small enterprise. The company was modest when it applied and has been approved for the loan, together with the payments being a reasonable rate to start with. The issue has been lots of the illegal clauses in the contract regarding asset and stock seizure.
Like the prior business owner from a few posts ago, this business owner had already established their company marginally. While it wasn’t a huge business, it had proof of affordability for the loan itself, and the application process had gone through a strict check. So, the business was always likely to be more affordable for the lender, with repayment expected.
Unfortunately, among those provisions inside the contract was that if a repayment had come late, or the company owner asks for the option to drive a repayment date back by a month or 2, then the loan company had the right to grab the inventory of the company up into the value of their repayment for that month.
Hence, the loan repayment clause was very unprofessional. If a company owner asks an additional month or two to get a repayment due to financial difficulties or stock not selling fast enough, to punish them by accepting the inventory that they would have used to generate the repayment profit at cost is indeed detrimental it takes weeks of repayment gains from this corporation.
Regrettably, there’s a second reason they had done this. Knowing that the company would then struggle to make a profit another month, they continued this cycle of talking inventory at cost until the business was no longer workable. While we sued for the fiscal price, we could not do anything about the business owners’ reputation.
Real Estate Attorney Houston is a firm that helped significantly with the asset side of this dispute.