Small Business Loan Scams

We are all aware that consumers are fighting tough economic times. Income is not increasing at the same pace as the costs for many staples such as food and gas. But it isn't only consumers who are suffering. Many small businesses are also facing higher costs and lower demand for products as consumers cut back.

Recently the Federal Deposit Insurance Corporation (FDIC) and the national Better Business Bureau (BBB) issued warnings that there is an increasing number of scams targeting small businesses. Emails and telephone calls promise financing outside of the banking channels. "For a fee" loan fundings are promised. The scammer often goes back to the small business owner and tells them they were denied by that first lender. But for another fee, often larger, they can go to another lender. And so it goes until the person making payments realizes they've lost that much more of their needed capital.

Small business owners, and consumers, need to take unsolicited offers of credit with a huge grain of salt. Find out who the lender is and investigate them, just as you are investigated when you want to borrow. Private investors do not provide you with many of the same protections that banks do.

Shop for credit wisely. Borrowing relationships are a two-way affair.