Protect Yourself From These 5 Business Loan Scams

Small businesses are more likely to fall for business loan scams as they look around for fast financing options. There are many different types of loans available in the financial industry today that are offered online, and many companies have grabbed the opportunity to apply for one through the convenient way. However, scammers are also out to take advantage of the same situation to prey on desperate business owners. Here are several business loan scams that you need to watch out for.

Advance Fee

Advance fee scams promise potential victims a cheap debt relief if they can provide an advance payment that will be treated as a processing fee. As you might have expected, they then take your money and abscond without disbursing any funds. To avoid such scams, always remember that credible lenders will not ask for any advanced payments upfront. Most lenders will deduct any processing fees from the loan amount to be disbursed.

Peer-to-Peer Lending

Peer-to-peer lending is a legitimate financing option that provides funds through an online platform. This is a widely known option which scammers have joined in to target unsuspecting victims. Peer-to-peer lending scams promise an even easier application process without the need for credit checks. Do not fall for something like this that sounds too good to be true. Some warning signs you can look out for include advanced payments, incredibly low interest rates, and requests for wire transfers. If you are searching for peer-to-peer lending options, always apply with a reputable lender.

Consultancy Fee

Consultancy fee scams often reach out to their potential victims through emails or an online ad. The scammer promises to help you secure some type of financing but you need to pay a consultancy fee. After you have paid the fee, the so-called consultant will disappear and never to be contacted again.

Funding Kit

Funding kit scams are similar to consultancy fee scams. The scammer promises to help you secure a viable loan through the provision of a financing kit that can be priced at a certain rate. The kit is supposed to provide the victim with a sure way to secure financing with attractive loans which seem too good to be true. For those with little to no understanding of finance are at a higher risk of falling for such attractive scams.

Credit Repair

Most people know that a chance of getting a loan relies on their existing credit score. For those with bad credit, it can be exhausting having to be rejected by several lenders. Credit repair scammers promise victims to improve their credit score by a hundred points or more so they can have a better chance at securing a loan. The repair services often come with a fee but they are not legitimate as credit scores cannot be repaired that easily and quickly. The only way to improve your credit score is to work directly with your creditors and not some scammers who claim to have extensive financial background.