4 ways to avoid credit scams and predatory lenders

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“Guaranteed loan approval; receive funds within 24 hours. ” “No credit check; interest rates from 0%; only a small application fee is required. ” These statements may sound pretty good for a small business owner desperate for capital.

But, as the old adage goes, “If something sounds too good to be true, it probably is,” says Carolina Martinez, CEO of CAMEO, a California microbusiness network. Just because this is the most common attractive solution does not mean that it is the right solution, she said.

Many small businesses are still recovering from the financial fallout from the COVID-19 pandemic, and with the end of the payroll protection program and approved bank loans below 20%, fraudsters and predatory lenders are seizing the opportunity to invade businesses looking for funding.

Protect yourself from potential intruders and find legitimate capital for your business with these four tips.


1. CAUTION OF SPEEDS

Fast isn’t always best when you’re looking for business finance. “Beware of quick sales,” says Tom McHale, president of Pursuit, a public lender based in New Jersey, New York and Pennsylvania.

While some online lenders excel at speed, predatory lenders can speed up the loan process in order to nudge you towards a high-value product without fully understanding the terms.

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