Several small businesses get duped in small business loan scams. Here are the top recommendations and practices to ensure one never falls for such traps.
Small Businesses need funds to grow and getting access to funds has never been easy as the local lenders ask for astronomical interest rates and the traditional lenders take a really long time to process the small business loans, which often takes weeks or even months. Moreover, the traditional lenders ask for collaterals like residential or commercial properties to pledge against the loan amount, which is rarely available with small businesses.
Hence, in these unavoidable situations, businesses often get trapped in the small business loan scams, which wastes time, money and a lot of effort to recover from it.
These Small Business Loan Scams come in various forms, some of the commonly known ones are:
Often people get across messages from business loan agents across various social media platforms, who guarantee a business loan within a short span of time, not only these unauthorised brokers cheat with advance money but may also misuse with the personal and business information they collect from the small business owners.
Many times small business owners get messages which claim that some unclaimed funds are available from government or a large enterprise and they have chosen you to collect the same. Just like the unauthorised brokers, these seamsters also cheat with money and also misuse personal identification.
3.Loan Settlement Scams
Another scam which has been identified of-late is the claim made by many seamsters to help the small businesses settle their existing business loans at cheap negotiated rates and also to increase their CIBIL score. As in previous cases, they also take money and documents and are never traced again.
While there are several more such instances, here are some ways to avoid getting trapped in small business loan scams.
1.Never Pay Advance Money
This is the first and foremost warning which a small business needs to be aware of, any business loan provider, investor or debt settlement agency that asks for money in advance to process things is mostly a scam and one needs to avoid them at all costs.
2.Unable to Verify
A small business needs to verify certain details before trusting any agency for their financial needs, be it a small business loan or any other requirement. One should check whether the service provider has a secure and verified website, does it has some customer reviews on Google and other review platforms, is there a physical address an contact number which is reachable. Also, the email ID should be official and not a generic email ID. While these may sound like basic details. However, most small business loan scams could be avoided with these verifications.
The authentic business loan providers do not run shoddy advertisements of other companies on their websites, their business model is to earn via processing fee or their arrangements with Banks and Lenders. If a website seems to be earning from ads it clearly shows that it is a potential scam that one needs to avoid.
4.The use of Word Guaranteed
The genuine lenders like the Banks, NBFCs or the top digital lenders like Indifi, never guarantee a loan, they all talk about increased chances of getting a business loan based upon certain criteria. One would often come across reviews that talk about loan rejections from these lenders as it is a normal practice. People and agencies who guarantee a business loan are really scams waiting to happen.
Now, since we are aware of the best practices on how to avoid getting trapped in small business loan scams, it is important to choose the right lender for your business needs. While the traditional lenders ask for collaterals a take a long time to process. One should switch to the top digital lenders like Indifi for their small business loans. Indifi not only offers quick business loans based upon easy online application but also offers unsecured business loans that are based on the business transactions itself and thus, one gets business loans that are integrated with the business and not depend upon collaterals to get their creditworthiness assessed.
Stay safe and practice these basic precautions to stay away from the small business loan scams.