Avoid Small Business Loan Scams
There is a great demand for business financing but along with that, many scammers take the opportunity to make money in the expense of other people. If you are a new business owner applying for a business loan for the first time, you need to be aware of the signs to avoid being a victim of scammers and unscrupulous lenders.
On this post, let’s talk about the signs on how tell legitimate loans from scams:
Guaranteed Loan Approval. Are you promised a guaranteed loan approval regardless of your credit history or compliance to the requirements? If yes, then you could be dealing with a scammer.
Legitimate lending companies typically evaluate the business owner’s personal credit history and business credit history before extending financing. The borrower is also required to submit a list of documents to prove that he/she is running a legal business and that the business has a strong potential to survive the market.
Upfront payment is required. A down payment is not necessary to obtain a business loan. You will only submit payment when the repayment period begins and this should be stipulated in the loan contract.
Watch out for lenders that promise to give you quick approval or incredibly low interest rates or reduced monthly payments in exchange for a considerable down payment. You might be asked to send so-called “processing fees” through wire money transfer. If a certain lender makes such a demand, chances are you are dealing with a fraudulent lender or “fly by night” companies that are only after one thing – your money.
No Physical Business Address. Avoid business loan lenders that operate solely over the internet. One of the basic requirements of a legal business is to register a physical business address and business telephone number.
Keep in mind that it’s too easy to create a website and post information to make look like a genuine lending company. Furthermore, stay away from lending companies that offer services online but are located outside the United States.
Irish Taylor is a bussiness loan consultant with Startup Business Loans and has been providing consumers and business owners with startup business financing since 1992. For years she has helped people with credit and loan problems especially pertaining to business start up, SBA loans and Unsecured loans.
Copyright 2010.
Related Article: Borrowing Money To Build Your Business
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