Red Flags to Look Out For When Applying For Business Loans
Business loans are essential for many businesses. Unfortunately, there are many people willing to take advantage of business owners through business loan scams.
While there are many types of business loan scams, it can be difficult to know what to look for to avoid being scammed. Here are a few red flags to look out for:
One potential red flag that a business loan offer is a scam is when it is unsolicited. If an email suddenly arrives promising a loan or you receive a cold call in which you are told about a loan offer from a company that you have never contacted, be wary as it could be a sign of a scam.
Especially look out for loan offers that offer additional services beyond just the loan itself, as most businesses will usually only offer these services if you ask about them first.
No legitimate lender will guarantee a loan without having at least conducted a credit check and a review of your company’s finances. Therefore, any mention of ‘guaranteed’ approval is a red flag that the loan offer is fake.
If a loan offer asks you for an upfront fee before anything else, this offer is a scam.
False or No Online Information
A simple way to determine if a lender is real is to do a quick Google search and see if you can find their company’s address or contact information. Listing a physical address is legally required even for online lenders, so lacking one is a quick way to identify a scammer.
Generic Email Address
Authorized lenders will use their website’s domain email to contact clients. Receiving mail from a generic Gmail or Yahoo account is a sign that you are being scammed.
It is important to note that while a generic address likely indicates a scammer, having a domain address does not guarantee that the lender is legitimate. Make sure all the information you receive is accurate, matches the information listed on their website, and whether a company name is misspelled or changed.
Aggressive Sales Tactics
Especially during COVID-19, people are willing to take advantage of other people making hasty decisions. If a lender is particularly pushy and constantly contacting you, then the lender is likely not trustworthy. While some legitimate lenders may be pushy, they make their money by providing sensible options that allow for you to repay your loan within the agreed upon time frame and will also give you time to consider your options. Lenders who rush you into making a decision can be a sign of a scam.
Too Good To Be True
Unfortunately, if an offer looks too good to be true, then it probably is. Lenders are always competing with one another to offer deals better than one another but there is a limit to what they can offer. If an offer sounds far better than all other possibilities, then it is likely a scam.