Signs You’re Signing Up For A Business Loan Scam

With phishing scams costing businesses half a billion dollars per year, there’s no denying that the threat is real. Social engineers, as these fraudsters are called, take their time in developing a believable persona and ensure they have enough information to convince the business owner or their staff that they are legitimate. Businesses are always looking for different ways to finance startup, growth, or expansion in a business and therefore become soft targets. When viewing things in hindsight, however, businesses agree that there are a few telltale signs that should have alerted them to the potential fraud. Discover these signs and how to circumvent them.

Beware The Upfront Fee

Legitimate financial institutions will include their loan fee in the contract agreement and this is payable over a period of time. The consumer has the choice to pay this upfront, but it shouldn’t be a requirement or condition of the loan. Those who insist on the upfront fee are operating a scam called the Advance Fee Scam. Once the fee is paid over, the lender breaks all contact and disappears, with the loan amount nowhere in sight.

Ensure They’re Following Laid Down Guidelines

One of the fastest ways to determine whether a loan broker is legit is by checking their terms and conditions regarding the fees. Those who are above board will follow the laid down procedures in order to keep their licenses and satisfy regulations. A customer can rest easy that legitimate brokers won’t require their fee before the conclusion of the deal. Acts such as the Fair Credit Billing Act also ensures that customers can enjoy error-free statements and that their fees will be charged correctly. These fees will also be collected in a fair manner.

Credit Score Boost For Nothing

Building up a credit score takes a very long time and any lender that is willing to disregard a poor credit score is willing to forego their repayments. To a business owner, this shouldn’t make sense, because it doesn’t. There aren’t lenders that can instantly repair a bad credit score or boost a score with their product. These agreements tend to come with very vague contracts where the terms and conditions are bigger than a telephone directory and when questioned, there is no response.

Business owners who are in the market for finance should do sufficient research before signing up for a loan product. There are a number of great options out there that are legit and not necessarily traditional.

 

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