Businesses often rely on business loans and other finance options to fund their companies. Far too often small businesses are the targets of deceptive lenders and complete scammers. If you are looking for financing, Business Consumer Alliance is here with tips that will help you steer clear of scammers and find the assistance your company seeks.
Identifying SBA Scams
The U.S. Small Business Administration (SBA) offers several funding programs to aid small business owners, including loans, disaster assistance, surety bonds, and grant assistance. Scammers notoriously solicit businesses through phishing calls, emails, and phony advertisements, offering lending assistance. If anyone contacts your business claiming to be with the SBA’s office or any government entity, be on the lookout for fraud. Verify who you are dealing with from the beginning to avoid falling victim to a scam. Never give your personal, business, or financial information to anyone you have not vetted thoroughly.
Here are a few of the tactics crooks commonly use:
- Promising approval of SBA loans for an up-front fee.
- Charging high broker fees for loan assistance.
- Offering high interest bridge loans while the business awaits SBA loan approval.
- Unsolicited contacts asking for personal identifiable and/or financial information.
Be aware that the SBA does not initiate contact for 7(a) or disaster loans or grants. The agency limits broker fees to 3 for loans of $50,000 or less and 2 for loans of $50,000 to $1,000,000, with an additional quarter of one percent on amounts over $1,000,000. If you want to apply for or get more information regarding SBA-related programs and funding options, visit their website at www.sba.gov, call (800) 827-5722, or email answerdesk@sba.gov.
Tips for Small Businesses
BCA urges you to do your research before accepting any offer. Comparison shop to get a realistic idea of how much funding will cost and whether you can afford repayment. Don’t give in to high pressure sales tactics or feel the need to act right away on an offer. If you feel a sales person or broker is rushing you through the process, it may be best to consider other options.
Review your obligations and the overall cost of the offer carefully before agreeing. Take your time to go over the contract thoroughly and clarify any items you don’t understand. Find out from the beginning what the consequences are if you cannot make payments on time. Never rely solely on what the sales person tells you. Get any guarantees and promises in writing.
If you are struggling to make payments, don’t avoid contacting your lender. By keeping the lines of communication open, you may be able to work out payment arrangements, request a deferral, or obtain other available relief. Check your contract again to see if there are provisions available such as lower payments or conditions that will allow you to stop making payments temporarily if your business is experiencing a lull.
Small Business Finance Providers
Businesses that provide loans and funding to small businesses have an obligation to remain transparent and avoid deceiving customers. Make sure your advertising claims, marketing practices, and sales representations are not misleading and deceptive.
When economic challenges occur, such as the current COVID-19 pandemic, it’s important to be available to your customers. Make it easy for them to get in touch with you and prepare your staff to handle common questions that small business may have.
Both parties are responsible for upholding the contract agreement. If there are provisions that the client is entitled to, they must be honored. If you find yourself having to pursue collections, follow the legal guidelines set by the Federal Trade Commission which prohibit false threats, harassment, and unfair practices.
BCA supports small businesses and is here to help during these trying times. Contact Us if you need further assistance and make sure to follow us on Facebook.