How to Avoid a Loan Scam

We came across a very interesting article in the BusinessWeek Insider entitled, Why Loan Scams are Increasing, and we thought our readers would be able to benefit from the tips included in the article about how to identify the warning signs of a loan scam.

Here’s one example taken from the article about how small business owners across the U.S. are being scammed:

“The advance fee loan scam targets small business owners looking for money to grow their businesses. Maybe they’re trying to get a construction loan, but they’ve been turned down by traditional lenders. Then a company draws them in and tells them they are going to qualify for a loan worth a couple hundred thousand dollars. They’ll say it’s your lucky day, and all you have to do is send some money to cover administrative costs, or taxes—they use any number of excuses.

Next, they ask for a wire transfer or a cashier’s check to cover these initial loan costs. Once the entrepreneur sends the money, many of the scammers simply disappear: Their phone gets disconnected and there’s no way to get a hold of them. Other times, the scammers manage to string their victim along for a couple of weeks, asking them to send more money to “complete the transaction.” They keep this going until the victim finally catches on, then they disappear.”

As a general precaution, the Better Business Bureau advises business owners to stay clear of any funding company who asks for fees upfront. (Rest assured that PRN Funding does not have any application fees, origination fees or due diligence fees.)

Click here to read the entire article: Why Loan Scams are Increasing.

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