Research showed that there are more than 150 million operating small businesses in the world. Due to this vast number of small businesses, a vast number of lending companies are pairing up with the banks and credit unions to offer external funding to the small businesses. Over the years, the system has revolutionized completely. Going back a decade, the business manager has to sit for a couple of months to get the best funding, and lenders preferred a good credit score. Now, a lending company is operating from every nook and cranny. The primary goal of every lender is to offer a convenient business loan to the lender and to get a loan you have to offer relevant information about your business and finances.
Multiple alternative lenders are offering authentic and legitimate loans to the lenders but in the very industry, some lenders take advantage of the financial need of the client. So before sharing all the significant information with the lender, remember when parents advised you to refrain talking to a stranger, it is time to act on this advice. So, dive in after checking the temperature of the water. Here are some of the signs that you are being scammed by your lender.
- Asking for money before closing the deal.
If your lender is asking you to make an upfront payment, the only thing you should say to the lender is “NO.” Most of the times lenders give out multiple names to the advance fee. If your lender is saying terms such as “low application fee”, “processing fee”, “administration fee”, or “one-time-fee” it is time to change the lender. Only pay the lender once you have shaken hands with the lender.
Always read the eligibility criteria before approaching the lender. For example, if the potential lender is offering a cash advance to businesses with a credit score of 600 and more, but you are standing on 575. If he asks you to pay the advance fee to check the eligibility criteria, then it is time for you to run.
Some lenders ask for the origination fee, but you should pay for the loan once the lender agrees to fund your business.
- All that glitters is not gold.
If the deal sounds too good to be true, then it is time to bid farewell. For example, if you are standing on the credit score of 500, with undocumented taxes, and on the top of this you have faced bankruptcy in the past, and your potential lender is offering a business loan with the lower interest rate, and flexible payments. With this poor financial position, a loan with perfect terms is not possible. Stay away from these lenders.
Remember, no lender will offer funds to your business, if it has a heavy cost attached to it. Don’t be tantalized by the irresistible schemes of lenders and only accept the business loan with rational terms.
- Unofficial mode of communication.
If lenders are approaching you when you have not taken the first step yourself, then notice that it is a scam. No lender will contact you via phone and will say we have fashioned a brand-new business loan for your small business. Lenders don’t make contact with business managers out of the blue.
The official and legitimate lending companies share information on their official website and social media channels and if want to get in touch with their financial lender you have to make an official call. In addition to illegitimate calls, emails, and messages, some lenders will try to offer services you didn’t ask for. Lending companies offer services such as business planning and repayment schedule but no lender offer these for free.
- Lack of virtual and physical presence.
When you are ”loan shopping” make sure the potential lender has both physical and virtual presence. If you are on call with the lender and you are unable to locate its physical address, then this an alarming sign! If you want to run a business in America, business registration is required and listing of a physical address is a must!
So before shaking on the final deal, the borrower must ask for the virtual and physical address of the lender to be on the safe side.
- There is no such thing as “Guaranteed” approval.
Many factors are involved in the approval of the business loan if you are in contact with a lender who is offering you a loan deal and is repeating the term “guaranteed” again and again. In the land of business loans, the only thing that can get you an ideal business loan is your perfect credit score, stellar financial statements, and a calculated and strategic business loan.
- The lender with generic email addresses is a scam!
Make sure the lender is contacting you from an official email address, if they are sending you email from Hotmail or Yahoo, then this is the time for you to stay goodbye.
Lastly, stay away from fake websites and cold calls. Now that you know all the loopholes and signs of scams you can apply for a business loan easily. Merchant Advisor is proud to present transparent funding and business loans with no hidden costs. We run a registered company, and we are always ready to answer your queries and eradicate your confusion. For more ideas and tips you can follow us on Twitter (@Onlinecheck) and Facebook (@Onlinecheck). If you have any question, feel free to call us on our toll-free number at (833) 827-4412, our loyal and keen financial advisor will answer your every question and guide you throughout the way.