Business loans can be an excellent idea to help your business grow. However, when shopping for a business loan, you want to remember that scammers out there take advantage of business owners they think may be desperate for help. Knowing how to check if a loan company is legitimate is essential. Business loan scams have long lasting effects on business owners and once the scam is done it is hard to recuperate those funds.
Sometimes things are too good to be true. Before you sign on the dotted line, look for these five signs your loan isn’t legit.
Requires an Upfront Payment
Scammers may ask you to send them money before you can access your loan funds. Sometimes, a loan may have legitimate upfront fees, such as an appraisal or origination fees. However, scammers push bogus fees as an attempt to take as much of your money as possible upfront.
The Lender Is Rushing You To Sign
Are you feeling pressured or rushed to sign? If so, you may be dealing with a scammer. The scammer could tell you that your loan offer will expire in a couple of hours, or the lender is asking you to start the paperwork before discussing terms and costs, which is a big red flag.
Private lenders typically offer loans with consistent deadlines, rates, and terms. Lenders may offer limited-time promotions like waiving fees, but you should never feel pressured or rushed to sign a contract.
The Lender Doesn’t Check Your Credit
When applying for a business loan, most private lending services require substantial documentation, proven revenue, good credit, and a couple of years under your belt in business. Scammers often insist that they’ve approved your loan even if you don’t meet standard qualifications. If someone calls and promises you an outstanding loan with exceptionally low interest, regardless of your credit or business history, you’re most likely being scammed.
The Loan Company’s Website Isn’t Secure
Lender websites can be tricky because loan applications with legitimate loan companies will require you to provide personal information such as your Social Security Number (SSN), Employer Identification Number (EIN), or Taxpayer Identification Number (TIN).
Scammers will try to trick you with names and logos similar to legitimate loan companies and create a website that looks professional. Look for a padlock icon where the web address appears in your browsers to ensure the website is safe. This symbol and “HTTPS” in the web address will indicate if the website is secure.
The Lender Is Asking for Unusual Forms of Payment
Always make payments for loans directly to the private lending company. If your “lender” asks you to pay with a gift card, Bitcoin, or pay directly to an individual, don’t do it, and stop talking to them. Also, be mindful of lenders who ask you to wire money for a business loan. Wiring the money will make it nearly impossible to get your money back if you discover the company has defrauded you.
Don’t get scammed! Always check for these five signs if you suspect your loan isn’t legit. Ensure you perform an intensive online search and check for an online presence and customer reviews, these can help you quickly identify potential loan fraud. You can also check the Better Business Bureau or your state’s attorney general to ensure that the lender is registered with the correct government agencies.
If you’re considering taking out a private loan and searching for a legitimate lender, Val-Chris Investments can help you! Contact us today for any additional questions or inquiries.