Scammers know that many small businesses are struggling to survive and need cheap loans. Often, such companies don’t trust banks or would be forced to put up assets to secure loans whereas scammers don’t demand such protection because they don’t intend to give out any money.
If a loan or service sounds too good to be true, it’s probably a scam.
If possible, have a trusted 3rd party finance expert who can advise you on business loans.
Watch out for these danger signs on any proposed business loan: –
- Money Up Front
Reputable lenders and brokers should never ask you for money up front – no registration fee or credit check fee or anything similar. An upfront costs means it’s probably a scam.
- Lack of a Physical Address
You should always check whether a business has premises – if not then be suspicious. A P.O. box number does not count as a physical address.
- “Guaranteed” Loans
Only scammers can offer loans where you are guaranteed to be accepted before you have given them any information on your financial circumstances. Offers of loans even for people with no credit history are bound to be fake.
- Cash Advance Lending
These are the lenders of last resort and charge exceptionally high interest levels – usually more than 100% APR and can be more then 1000% APR. To be avoided at all costs.
If you have any experiences with loan scams do let me know, by email.