No one wants to get scammed when seeking financing for a small business, but it happens every day. The desire for financing often overrides people's better judgment and they fall victim to scams. Check out some of the most common scams so you can avoid them.
Advance Fee Scam
The advance fee scam is one of the most common small business financing scams out there. A fake lender asks for a processing fee in order to process the loan. The fee is often thousands of dollars. Once you pay the fee, you'll never hear from the scammer again. If someone asks you for money before giving you money, run away as fast as you can.
Equipment Lease Scam
If you need financing for equipment, you might fall victim to the equipment lease scam. These scammers seek out people who can't afford new equipment. They offer to rent them the equipment at a low price, and all on credit. You can get the rental, even if your credit isn't great. There's just one catch. You have to send in the first and last month's rent before the company will release the equipment. Just don't expect to hear back from the company after you send in the money.
Some criminals also try to get small business owners' personal information so they can steal their identities. They call or send emails and ask them for personal details. They make the owners think they are applying for loans, when in reality, the criminals are stealing the information.
Always go with a trusted lender when borrowing money. That way, you don’t have to worry about falling victim to a scam. Then, you can get your money and use it to help your business instead of spending your days and nights fighting to get your money back.