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News of stimulus money gives hope not only to small businesses in need, but also to scam artists looking to prey on those seeking government assistance. With headlines publicizing increased federal support for small business loans, small businesses need to be on alert for loan scam artists. Here are 6 tips for avoiding small business loan scams.
One reason news of increased SBA backed loans brings out the scam artists is because SBA loans do not go directly from the government to small businesses. Private lenders make the loans, portions of which are then guaranteed by the Small Business Administration. This leaves room for scam artists posing as middlemen offering quick access to the government money. Instead, they often disappear with fee payments from the victim and/or that victim's private information such as social security number and bank account information.
For this reason, it is highly important to research any potential lender or loan broker. As a starting point, the Small Business Administration maintains a list of preferred lenders. The SBA bases its Preferred Lender Program on lenders' past performance with the agency.
Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.