4 Things to Look Out for When Looking for an Online Business Loan
21 Sep, 2017 / Comments: Comments Off on 4 Things to Look Out for When Looking for an Online Business Loan / By William Mahnic
The rise of the internet has made just about everything easier. This includes applying for business loans. Securing a business loan is essential for many business owners. Applying online means that you don’t have to take the time out of your busy schedule to go to a lender and apply in person. The problem with everything being online, however, is that anyone can make a website. While there are many legitimate online lenders, there are also many that are out there to take advantage of unsuspecting business owners. Applying for a loan with an illegitimate online lender could cost you big. Here are four things to look out for while you are looking for an online business loan.
1. No Physical Address
In a world where just about anything can be done online, there are plenty of operations that operate solely on the web. This is not true of lenders. Legitimate lenders should have a physical address. Avoid any lenders that do not provide an address.
Many fraudulent operations will go through a lot of work to make their “business” sound legitimate. This may include professional looking websites, forging paperwork and paying for references. Some may even say that they are accredited by the Better Business Bureau (BBB). Many may include an address on their fake website. You can always check addresses and phone numbers with official websites or phonebooks. You can also contact the BBB to confirm.
2. You are Required to Make Upfront Payments
Legitimate lenders often send out pre-approval letters. Fraudulent “lenders” will often do the same thing, which can make their pre-approval letters (or emails) appear real. There is one clear way to tell the difference between legitimate pre-approvals and the fake ones. Pre-approval letters from scammers often say that you are required to pay a specific fee before you ever receive your funds. The reasons behind these fees often include such things as fees for processing, insurance, paperwork or registration. Legitimate lenders may require fees, but they do not require them upfront. Their fees are often removed from the amount borrowed and are taken after the loan has been approved. Their fees are also clearly stated.
3. Credit Repair Services
If you are a new business, you are going to have little to no established credit history. Lenders know and understand this, so they don’t expect it when you apply. Fraudulent lenders will often work to convince you otherwise. They will try to sell you credit repair services that claim to make you more eligible for a business loan. Legitimate lenders tend to look more at your revenue and other application details rather than your credit score. Personal credit score higher than 650 will often provide you with numerous options. Scores that are in the 500s will often benefit from personal credit repair services, which are different from the credit repair services that fraudulent lenders claim to provide. You need to seek out these services; the lenders will not approach you. Avoid anyone who tells you that it’s necessary to repair your business credit before applying for a loan. If you do opt to use a personal credit repair service, make sure that you seek out a reputable service there as well.
4. You are Given a Guarantee of Approval
There are very few guarantees in life. No true lender will claim to provide you with a guaranteed loan before you have even applied. Most are willing or able to work with you in the event of poor credit, bankruptcy or other issues. This can often make their approval ratings high. They will not, however, promise you money before receiving or reviewing your application. These promises may be tempting, but it is in your best interest to steer clear.
The rise of applying for business loans online provides you with more options when it comes to securing the finances you need to either get your business up and running or to keep it running successfully. This has also led to the rise of individuals looking to scam you out of your money. Trust your instincts. If something doesn’t seem right, it probably isn’t. It is essential that you do your research before signing any agreements.