The Basics of Business Loan Scams
Business loan scams target small businesses and business owners in an attempt to get them to sign up for loans that they will never be able to repay. These scams often involve promising a lower interest rate or a longer repayment period, only to later increase the interest rate or shorten the repayment period. In some cases, the scammer may even threaten to take legal action if the loan is not repaid. In other instances, businesses are scammed out of money by signing up and paying fees for loans that they never received.
Common Types of Business Loan Scams
- The “Advance Fee” Scam: The scammer will promise to provide you with a loan in exchange for an upfront fee. They may even go so far as to send you a fake check for the amount of the loan, which you will then be asked to deposit into your account. Once you deposit the check, the scammer will then withdraw the money, leaving you with a negative balance in your account.
- The “Phantom” or “Ghost” Loan: The scammer will approach you and offer to provide you with a loan. They may even show you fake documents or websites that appear to be from legitimate lending institutions. However, once you agree to the loan and provide them with your personal information, you will never hear from them again.
- The “High Interest Rate” Scam: The scammer will offer you a loan at a much higher interest rate than what is available from legitimate lenders. They may also charge excessive fees and penalties if you miss a payment.
- The “Ponzi” Scheme: The scammer will promise to provide you with a loan that will earn you a high rate of return. They may even show you fake documents or websites that appear to be from legitimate lending institutions. However, the money you invest in the loan will actually be used to pay other investors, and you will never see any return on your investment.