Borrower beware. The Small Business Administration is warning against scams related to small-business borrowing, including dubious marketing practices and exorbitant fees charged by firms who say they can help with loan applications.
Here’s what the SBA is saying to watch out for:
- Firms charging small businesses high fees to provide assistance applying to SBA funding programs. Some firms allegedly guaranteed that the small business would obtain SBA funding if they paid the fee. SBA does not endorse or give preference to specific private companies or their clients.
- Firms charging small businesses for services never requested after the small business gave bank account and routing information to a caller claiming to be a firm offering assistance. SBA recommends that small businesses never provide social security numbers, bank account information, or credit card numbers to anyone; and, never over the telephone.
- Firms alleging that a small business would be issued a “forfeiture letter” that would make the small business ineligible for any SBA funding for three years if the small business refused to use the firm’s services.
Small-business owners should ask for references when working with lending services and document details about why, what and when they’ll be charged. They should also document what their obligation is and what services they’ll receive for fees.
Free loan assistance is available through SBA district offices. Visit www.sba.gov for more info.
Know a small business you think we should write about? Contact Herald writer Amy Rolph at arolph@heraldnet.com.
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