Business loan scams. How to detect and avoid them

Business loan scams. How to detect and avoid them

The Internet and new technologies have made thousands of tedious and bureaucratic processes much more agile, efficient and secure, including the management of personal and business loans.

Today, there are many Fintech specialized in helping you get a credit, like Limitum, which helps you compare between dozens of alternatives for you to choose the SME loan that best suits your needs.

However, not everything is rosy and just as it is now easier for small businesses to become more competitive by acquiring quality financial products, the phenomenon of fraud in this area has also grown alarmingly.

According to a survey conducted by the BBB, 67% of SMEs feel that today there is a greater risk of being swindled than three years ago. Credit-related scams amounted to 50 trillion in monetary losses.

One of the biggest problems is that scammers are often masked behind false identities or by pretending to be part of respected financial companies and banks. Fraudsters take advantage of the need for businessmen and entrepreneurs to obtain fast and cheap financing to steal money, personal data and sensitive information from a business by pretending to be legitimate credit brokers.

Fortunately, there are many ways to detect and prevent these frauds. Scammers can contact you in many ways and with different speeches, but they all have in common some factors that will help you determine that they are not reliable sources. Here are the 6 most common types of business credit scams.

Advance handling fees

These types of scams promise low-interest or even 0% loans, and ensure that the applicant can acquire them even if he or she does not have a good credit history. The only detail is that they ask for an application fee in advance.

The name given to this “fee” can be very diverse: management advance, security investment, broker’s fees, etc. Whatever label you put on it, the point is the same: someone asks you to deposit money into an account before your credit is authorized.

Some legitimate credit brokers do ask for fees in advance, as do banks, for processes such as background checks and openings, but they will never promise that such a payment ensures the authorization of a credit, much less when you don’t have a solid credit rating.

“Loans” between private individuals

They are very similar to the previous ones, but instead of offering you a loan from a bank or a lender, the scam revolves around the model of credit between individuals, which makes a little more credible promises associated with eligibility, immediacy and low interest.

There are many platforms on the Internet that mediate loans between individuals in a completely legal and transparent manner, but the scams tend to come through publications and messaging on social networks and forums.

Entrepreneurial or government fund fraud

They usually start with an email message that “notifies” you that you have been selected to receive an entrepreneurial fund for your business from the government or an institution that for whatever reason is interested in boosting your business.

Same dynamic: to “secure” your fund you have to make an advance payment for management. In other cases all you are asked to do is fill out a form with sensitive information that can then be used for identity theft or account theft.

The reality is that no institution that offers this type of benefits actively looks for companies to give them to, but they issue the pertinent calls and choose the benefited businesses from a selection process among the applicants.

Ghost Investors

Suddenly an “investor” appears interested in capitalizing your company because your business model has caught his attention. Sometimes you are asked for the classic advances in management or intermediation, but more commonly try to apply giving them personal data and information that should be confidential.

Brokers swindlers

There are an impressive number of individuals who present themselves as expert corporate credit brokers and are actually just scammers who charge the first management fee and run away without you ever hearing from them again.

As you can see, unfortunately there are many scammers willing to take advantage of the need for entrepreneurs and entrepreneurs like you to finance their business.

Never take unsolicited credit proposals seriously, and when you need to manage one, go to trusted platforms like Limitum, where we help you select your credit from dozens of legitimate financial institutions, in a completely transparent manner and without charging you a cent.