William
Old Bridge,#2Consumer Suggestion
Fri, April 09, 2004
To all entrepreneurs: Do not enter into a financing deal with upfront fees to your project. Treat such fees as a red-flag for fraud. The common practice among venture capitalists is to recoup their transaction costs at closing. Every investor will perform a due diligence on your company; these are his costs of doing business. The reputable investor will assume these expenses, and will not recoup them if he (the investor) pulls out of the deal. VCs may, however, ask for "break-up" charges if the entrepreneur pulls out of the deal. If asked to pay upfront fees, take the following action: 1. Politely refuse, but suggest that all transaction costs (including yous) be reimbursed at closing. 2. Negotiate a cap (maximum) you will pay for the investors cost upon either closing or break-up. 3. Make sure you are not obligated to pay any fees to the investor if he chooses not to fund your project!!! 4. If the investor refuses your suggestions above, report him to the Better Business Bureau and his state's regulatory agency as probable fraud. Most important...do not take out your checkbook!
William
Old Bridge,#3Consumer Suggestion
Fri, April 09, 2004
To all entrepreneurs: Do not enter into a financing deal with upfront fees to your project. Treat such fees as a red-flag for fraud. The common practice among venture capitalists is to recoup their transaction costs at closing. Every investor will perform a due diligence on your company; these are his costs of doing business. The reputable investor will assume these expenses, and will not recoup them if he (the investor) pulls out of the deal. VCs may, however, ask for "break-up" charges if the entrepreneur pulls out of the deal. If asked to pay upfront fees, take the following action: 1. Politely refuse, but suggest that all transaction costs (including yous) be reimbursed at closing. 2. Negotiate a cap (maximum) you will pay for the investors cost upon either closing or break-up. 3. Make sure you are not obligated to pay any fees to the investor if he chooses not to fund your project!!! 4. If the investor refuses your suggestions above, report him to the Better Business Bureau and his state's regulatory agency as probable fraud. Most important...do not take out your checkbook!
William
Old Bridge,#4Consumer Suggestion
Fri, April 09, 2004
To all entrepreneurs: Do not enter into a financing deal with upfront fees to your project. Treat such fees as a red-flag for fraud. The common practice among venture capitalists is to recoup their transaction costs at closing. Every investor will perform a due diligence on your company; these are his costs of doing business. The reputable investor will assume these expenses, and will not recoup them if he (the investor) pulls out of the deal. VCs may, however, ask for "break-up" charges if the entrepreneur pulls out of the deal. If asked to pay upfront fees, take the following action: 1. Politely refuse, but suggest that all transaction costs (including yous) be reimbursed at closing. 2. Negotiate a cap (maximum) you will pay for the investors cost upon either closing or break-up. 3. Make sure you are not obligated to pay any fees to the investor if he chooses not to fund your project!!! 4. If the investor refuses your suggestions above, report him to the Better Business Bureau and his state's regulatory agency as probable fraud. Most important...do not take out your checkbook!
William
Old Bridge,#5Consumer Suggestion
Fri, April 09, 2004
To all entrepreneurs: Do not enter into a financing deal with upfront fees to your project. Treat such fees as a red-flag for fraud. The common practice among venture capitalists is to recoup their transaction costs at closing. Every investor will perform a due diligence on your company; these are his costs of doing business. The reputable investor will assume these expenses, and will not recoup them if he (the investor) pulls out of the deal. VCs may, however, ask for "break-up" charges if the entrepreneur pulls out of the deal. If asked to pay upfront fees, take the following action: 1. Politely refuse, but suggest that all transaction costs (including yous) be reimbursed at closing. 2. Negotiate a cap (maximum) you will pay for the investors cost upon either closing or break-up. 3. Make sure you are not obligated to pay any fees to the investor if he chooses not to fund your project!!! 4. If the investor refuses your suggestions above, report him to the Better Business Bureau and his state's regulatory agency as probable fraud. Most important...do not take out your checkbook!
Justin
San Francisco,#6Consumer Comment
Fri, May 23, 2003
These guys do NOT represent themselves are loan providers... they say they are EQUITY INVESTORS!!!! A true equity investor would never ask for upfront fees.. These guys should be in jail!
Alan
Atlanta,#7UPDATE Employee
Fri, May 23, 2003
I am very intrigued by how many borrowers and brokers who think that there are lenders out there who do not charge up front fees. When I tell them about the up front fees on our loan programs, they say things like: "Reputable lenders don't charge up front fees". No up front fees, is how it is done in the financial world". "Upon approval of the loan or letter of commitment then my client will pay all the fees". I have been in this business for quite a long time and I have heard this, countless times before. It appears that there is a "myth" out there. I'm talking about the "Mythical Lender". You know who they are. They are the lender that does not charge the borrower one dime in up front fees to close their loan. I have asked borrowers and brokers countless times, who is the lender that does not charge up front fees and no one has ever given me an answer. The truth is, that they do not exist. But, maybe you would like to be the one to prove me wrong! What is actually happening here is quite simple: There are a lot of borrowers with no money for fees who perpetuate this myth, because they want lenders to give them a free ride. Lenders have costs to underwrite a loan, do a site inspection, their own appraisals (not yours) and a lot of other due diligence. There is also considerable cost in blocking or setting aside the money to fund your project. Only about one in ten loans submitted to a lender ever closes. Should the lender bear all of these costs for the nine borrowers who thought they had a good project, but failed to prove for reasons too numerous to mention that they could repay the loan? Do these borrowers with a dream deserve a free ride? All reputable lenders charge up front fees that are refunded or credited back at the closing of the loan. What would be the purpose of paying fees at closing, only to have them refunded minutes later? I have often wondered that if what these borrowers and brokers say is true, why are they contacting me? Why are these borrowers and brokers not contacting that "Mythical Lender" who doesn't charge up front fees? I'll make it real easy for you. Again, I say they do not exist! Borrowers and brokers have been dreaming, because as I said earlier, they have no money. They may indeed have a great project, but they have no money. Oh sure there are a few borrowers out there who might have money, but they have heard this "myth" so many times that they think it is true. If it is true, why aren't they closing their loans with this "Mythical Lender? Please prove me wrong, I beg you! Please tell me who this "Mythical Lender" is and I will send all of my business, through you to them! In fact I predict that if you share with me their secret name, location and phone number, that I will help you become the wealthiest broker on the planet in a very short period of time!