A loan may be the answer to your financial woes. If approved, you get the money in a matter of days for whatever you need.
When going in search of loans, you must realise that loan scammers exist.Loan scammers target small businesses just as they do individuals. Fraudulent operators might appear legitimate at first glance, presenting slick-looking ads and websites featuring made-up testimonials from happy customers.
Fortunately, there are some tell-tale signs that separate the scams from the real deal.
Below is an overview of some red flags that you shouldn’t overlook:
- Money upfront: There is never any reason to pay a loan broker upfront. It doesn’t matter what reason they give, be it administration fees, processing costs or anything else. A loan broker should only ever get paid by the lender, in commission, after the deal is done.
- No contact information: Avoid lenders who don’t have a physical address or easily-found contact information. Even lenders who are solely online have clear and easy-to-find contact details and headquarter locations that indicate their legitimacy.
- Really, really good rates and terms: It’s sad to say, but if a deal looks too good to be true, then it probably is. Lenders are competing with each other and are constantly trying to offer better rates and loan conditions to attract more business, but they have limits as to what they can offer without losing money. If there’s one lender who seems to be offering a deal that exceeds other details by a long way, you may have cause to be suspicious.
- They guarantee acceptance, or anything else: No lender can guarantee that you will be approved for a loan. When a business offers customers a guarantee, that’s a binding promise they must deliver on. Without submitting your business application, you shouldn’t trust any guaranteed loan.
- Generic email addresses: If a business lender is emailing you from a Gmail, Hotmail, Yahoo or other generic email account, then something is off and you should tread carefully. Lenders should be conducting all business with an official business email address.
- Unsolicited services and contact: If a lender offers you a loan unsolicited, it may be a sign of a scam. Lenders don’t offer loans with a cold call. They might send promotional letters in the mail or display ads on your browser, but even those are based on some background information on you.
- The wrong type of loan: If you have a pretty good idea of what type of business loan you need but the lender wants to push you towards another option, you may want to be cautious. You might be being steered towards a product with higher rates or worse terms.
- A hard sell: Does your lender seem a bit too eager? Are they contacting you frequently, trying to rush you into a decision, offering free gifts or throwing around phrases like “limited time only” or “last chance”? Legitimate lenders make their money from offering sensible options that you can repay as planned. Scammers make their money by rushing people into bad decisions with big promises, and then running away with the money.
