Today, financial scams have become common practice. Accounting information users majorly rely on financial statements to make investment decisions. Experts geeks can hack into company databases to collect their target audience. Regular working professionals and families are contacted through these experts/scammers online or via digital phones to conduct business loan scams.
Business loan scams have increased tremendously especially targeting small businesses. Cons can cover advance-fee scams, peer-to-peer lending scams, consultancy fee scams, ghost investor scams, funding kit scams, or credit repair scams. With most businesses dependent on digital data, digitally identifying people in need of business loans has increased.
Further are 10 tips to avoid business loan scams:
No loan fee
Refuse to pay any loan fee charged right at the beginning of the process. If a person demands money in the initial steps of the loan process, 99% of it is a scam and worth raising a red flag. It is often termed as ‘application fee’, ‘processing fee’, etc. No reputed online lender will charge anything in advance until the loan gets approved.
Research prospective lenders
Any personal loan app used must be recognized by the Reserve Bank of India (RBI) and affiliated with a known bank. It should clearly state the details of the loan, including terms and conditions. The lending professional or organization must also have a physical office address. Information about lenders must be obtained through an online search. Moreover, reviews and ratings can also help to identify suitable lenders.
Seek expert advisors
If you are unsure about the business loan, contact your network base for help. Contacting organisations such as SCORE or SBA help as they provide consultation free of cost. They also offer tutorials on how to avoid business scams. Experts can keenly spot a doge over a loop as they know all verifiable requirements.
Avoid random source links
Make sure you verify the identity of the sender, even if the email or message looks official. The sender’s email must end in @sba.gov. Keep your business safe from phishing attacks and invest in security software and fortify digital security.
Be cautious of speed sell and phishing attacks
When it comes to business funding, you should not jump into anything speedily. Fake lenders can rush you through the process to secure a business loan without giving time to understand its terms and conditions. Seek to speak and meet with loan representatives directly rather than communicating through a bot or live chat. It will help to understand terms and conditions clearly.
Most phishing attacks manage to replicate the logos of government organisations. If you apply for a business loan and the email correspondence asks for personal information, remember to check the application reference number and conduct a proper verification.
Also Read: 5 Best And Fast Small-Business Loans
Refrain from sharing personal or financial information
Security scams and financial scandals have manipulated large amounts of money, bloated stock markets, and the Sensex. Phone messages or emails are not legit ways of sharing personal information. Often, agents ask for bank or card details over the phone; it must be red-flagged immediately. Asking for confidential, personal information over a phone conversation is a standard route of a business loan scam.
Identify the greed
One thing that the victims will often have in common with the perpetrators of the scams is greed. Scam merchants will offer something that appears to be of great value (or even free) to the victim’s company. Perpetrators will often offer something to the victim (thank you for your first order). People accepting messages without obtaining further information and/or a second opinion invite scam merchants into their lives. During telephonic conversations, it is easy to identify the lender’s greed by asking as many questions as possible.
Don’t pay money immediately
Paying money before the application is approved most certainly can be a scam. Even if an amount is to be paid before loan approval, immediately get into a contractual agreement. The process should take time and should not be conducted in a hurry.
Identify fraud markers
Fraudsters can be identified by observing certain personality traits. The following are some essential points to detect scammers:
- Pressure to act immediately.
- Provide no proper physical address.
- No secure website.
- Reluctance to disclose fees.
- Grant no sanction letter.
- Conduct improper formalities during the entire process.
Typically, before approving a business loan application, there is always a history or background check. The lender checks the credit history of the borrower to determine the interest rate. If the lender does not perform this, it could be a scam. Financial institutions also are very particular about offering personal or business loans.
Phone numbers play a crucial role in many of today’s fraud operations. Scammers can mask their identity with fake names, contact details, bogus company websites, and VoIP services using various free online tools. When these false firms or identities are linked to a phone number, they can appear more authentic, allowing for a speedier, more intimate interaction with the victims.
If you still become a victim of a business loan scam, there is no need to panic or worry. Visit the nearest police station to report the case and provide all necessary information. It is worthwhile to also inform your bank about the same and get your accounts blocked if needed. Report fraud or mismanagement of federal funds by contacting the SBA OIG hotline.