In the past few years, loan scams have increased significantly. These scammers exploit businesses’ vulnerabilities and impersonate government agencies and lenders. In fact, research shows that more than $2.8 billion were lost to government imposter scams in 2021.
These loan scammers make big promises and claims that are too good to be true, but since you urgently need funds, it’s easy to overlook all the red flags. These scammers use different tricks to gain your trust, including using fake company logos and caller ID numbers. Instead of offering you the loan they promised, they will:
- Gain access to your personal accounts
- Obtain sensitive information, such as credit card number, SSN, or other personally identifiable information (PII)
- Charge high processing fees
- Charge high-interest rates
To help you identify and avoid such scams, our business loan agents in NYC have created a detailed guide.
Advance Fee Loans
A fake loan company will promise quick access to a business loan of your choice with a low interest in exchange for a high upfront cost—this is known as the advance fee loan scam. They call this upfront cost an application fee or processing fee. Once you pay the high advance fee, they will vanish from the face of the earth, without offering the loan they promised.
Scammers usually use this trick on businesses with poor credit scores who can’t secure a loan from other lenders or with companies in a cash crunch looking for quick funds. Make sure you never work with a lender who asks for an upfront payment without offering any service first.
Debt Cancellation or Credit Repair
Debt cancellation and credit repair scams increased during the pandemic when people experienced high debts. Scammers claim they will get rid of your debt or improve your credit score in exchange for high fees. They impersonate private debt settlement companies to collect payments from people for debt cancellation but increase their debt instead. Avoid working with companies that make any of these promises; they’re just after your money.
This loan scam involves a ghost investor who’s willing to invest in your business and asks for sensitive information about your company along with a processing fee. Once you provide your information, they use it to blackmail you or perform data breaches to get more money. Make sure to never trust any mystery investor.
At Whitestone Fund, we have been offering business loans for many years. We work with legitimate private money lenders and don’t charge any upfront costs, processing fees, or origination fees. Our loan agents provide the necessary paperwork and documents before starting any work. Working with us helps you avoid loan scams and have secure access to funds without any catch.
Whitestone Fund offers various business financing solutions in NYC, including cash advances in Yonkers, short-term business loans in NYC, working capital loans, and business lines of credit. Contact us for more details.