Over the past decade, online growth within the finance industry has made it easier than ever for owners of small businesses and startups to access alternative funding and equipment finance. Unfortunately, this has also led to an increase in criminal loan scams. In the digital age, where access to business finance can be arranged without a face-to-face meeting, it’s become much easier for unscrupulous individuals or gangs to perform scams. But what are the top business loan scams affecting SMEs looking to secure business loans right now? Let’s consider the following:
1) Advance fee loan scams
The advance fee loan scam involves a company which promises quick access to low-cost business loans in exchange for a payment upfront. Some scammers like to call this a “processing fee” or “application fee”. Whatever they call it, the modus operandi is the same: your business is being asked to put money down without any indication that you’ll be approved for a loan. It’s a trick that’s commonly used to target companies that are currently experiencing cash-flow issues or are suffering from a poor credit rating.
2) Credit repair scams
Most decision makers will be aware that a good credit rating is important when it comes to securing equipment leasing. Some people are therefore tempted by the credit repair scam to try and improve their current rating. The scam typically involves paying an organisation an extortionate amount to perform tasks you can already do for free (such as removing errors from your existing credit report).
While legitimate credit repair organisations do exist, their services are unlikely to completely restore a flagging rating overnight. If it sounds too good to be true, it probably is.
3) Ghost investment scams
Anybody in the market for business loans or equipment finance should be wary of these types of scam. It typically involves the promise of a mystery investor unwilling to invest in your company, who will then ask for sensitive information (such as your company bank details) in order to invest. To add insult to injury, the supposed “investor” might even ask for an administrative fee, as per the advance fee scam, before fleecing your business account.
To avoid these sorts of scams, it’s important to only source equipment leasing and business finance from a reputable company that can offer a choice of payment options spread monthly.
Business loan scams – where to find out more
Established since 1989, Tower Leasing Ltd is a funder with the support of brokerage facilities which enable companies across the UK to acquire much needed capital equipment through leasing. We create the opportunity for businesses to manage their cash flow whilst being able to secure the latest assets and technology which enables our customers to stay competitive within the market. Our services also provide the capability to deliver additional funding to support your business growth with our wide range of finance solutions.
Find out more about the range of finance options we can offer you to help you expand your business or acquire capital assets.
Or please get in touch to discuss how we can help.
Image: Money at hand by Don Hankins licensed under Creative Commons 2.0
