Loans are a common means of generating additional funding or cash for your specific needs. One particular loan that is essential to entrepreneurs is a business loan. These types of loan support the business or business owners on generating funds for capitalization and expansion. It can also be used for debt restructuring or other financial management strategy needed to keep the business from continued operations and expansion.
One business channel in particular that has been growing these past years is online businesses. This has led to more an more business loans that are entering the financial industry. Unfortunately, where there is demand, fraudulent acts linger as well. With the business loan scams also growing with the financial market, it is best to learn and watch out to avoid falling into their trap.
- Fees Payment that is Required Upfront.
There are cases where a fraudulent lender will require you upfront fees. These upfront fees are then presented as processing fees, evaluation fees, etc. Upfront fees are not required by any lender. Any fees that are needed to be paid during the onset of a business loan should be deducted from the total loan proceeds. Be careful with this type of scam as the fraudster often promises approval and low-interest rate (the kind we want to hear) for a very low “Advance Fee”.
- Peer to Peer Lending
These lending platforms are usually established within an online community such as Facebook and other social media platforms. Because of this, business loans are often offered by scammers under this type of lending. The offering comes from one of the peers in the group soliciting for upfront payments but the lending institution represented is often non-existent. Peer lending is one of the effective ways that allow fraudsters to prey on borrowers. And since most peer lending scams are done online, you not only lose money but your personal identification as well.
- Credit Repair Scams
Most of the businesses have an average credit scoring. A business desires to have one of the highest credit scorings as it allows them privileges that they don’t get unless the scoring that has been given to them is good. How it works is that fraudsters take advantage of businesses or business owners by asking them to help them repair their credit only to find out that a loan has been applied under their name without receiving any proceeds.