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Staying Safe

Consider Retaining a Business Attorney

Even if you think you know more than everyone else, a business attorney can save the day in so many different ways it's one of those must-have services for business. Business attorneys have very likely read more business agreements, contracts, and lending documents than you will ever read in your lifetime. They know what to look out for and they can save you from making the mistake of a lifetime. When borrowing money, especially a lot of money, an attorney is almost always a must-have. Check around your area for an attorney that has experience with business agreements and call them before you sign your life away. Yes, they may cost you some $ but imagine what may happen if you sign a confusing agreement without understanding all the fine print only to find you gave away some control of your company. It happens, so if you don't feel comfortable signing any agreement - seek out a qualified business attorney. When dealing with money, finances, loans, etc a business attorney is a valuable asset for your business.

Excessive Phone Calls or Emails Can Signal Trouble

Many companies in the business lending industry are a bit over-the-top when it comes to phone call or email solicitations. Some companies call 4-5 times per day and send 4-5 emails per day (yes, per day) to get your business. What they don't understand is this has a negative effect on their prospect and almost always chases them away from a sale. If you are receiving a tidal wave of calls or emails and the lender won't stop calling or emailing you - many others take that as a sign you should steer clear and not do business with them. Professional companies that care about their customers will respect your privacy and peace of mind and will not harass you into doing business with them. If you receive emails from the same lender over and over again, and if they have a website, you can stop the emails by finding out what service is sending the emails for them and contact their abuse department. You can often find who the sender is by looking in the message header and it is often listed in the line that has "List-Unsubscribe on the far left side of the header. The email vendor they are using will take complaints seriously and they may even throw that lender off their service with enough examples of abuse.

Don't Be Fooled by a Fancy Website

It doesn't matter how professional a website can look or how many citations or references are quoted on their website - all of that can be made up in a matter of seconds. Use a service like Yelp to reseach the company and also visit the The Better Business Bureau to see if there are complaints against the company. Even a fancy 800 number with lots of extensions listed on the introduction message can be obtained for cheap so don't assume every company is professional. Just do some research, check for comments on the big search engines, and use your own detective skills to see if the company is worth your time. Private lending companies (known in the industry as "Alternative Finance" or "Alt Fin") that are professional and reputable will be easy for you to conduct research.

Does The Deal Seem Too Easy?

This is often a warning sign. If you are told that your credit doesn't matter (at all) and they have money available to lend for some crazy low rate of like 3%, you should be on high alert. Your credit score DOES matter, even with business lending, because the lender has to know (a) you really exist, and (b) you are not a scammer yourself. Sure, the private lending companies can have money sent to you next-day with relative ease but even they need to see you actually exist in a credit file. A crazy low interest rate (in some cases 1%, etc) can also be a red flag to watch out for. No lender in their right mind is going to lend you money below what the money costs them. That's call losing money and lenders aren't in the business to lose money. If you are quoted an interest rate that seems impossible then do some research on the company and ask for all of the details on how they can lend at such a crazy low rate. If they tell you it's "family money so the rate can be low" - run for the exits because that's not realistic. Conduct research and check reviews from multiple reputable websites to see if the company is likely legit or not.

Watch Out For Up-Front-Fee Scams

Many business owners fall for the up front fee scam because they feel the lenders "prep time" is worth money so they assume the up-front-fee of (for example) $249.00 is because the lender has costs involved in document prep, credit checks, underwriting, etc. No so fast! Any bank, credit union, leasing company, or even investment firm will not ask for money up front. They almost always deduct the document prep fee from the loan or add it to the first lease payment AFTER the loan or lease is approved and funded. Never pay an up front fee - you will almost always find that lender and your money have vanished. Please note, if you are borrowing money and using your home or business assets as collateral then you may be required to pay money to an appraiser directly. If you are asked to pay the appraiser their fee in advance, offer to pay by credit card or even PayPal as you have some protection in place in case the appraiser walks away with your money.

Is the Lender Missing Details?

Here is the web comes in handy. If you have selected a few lenders, leasing companies, or investment firms to talk with and are finding difficulty researching a specific company - be careful with that company. Any reputable company that is in the business of lending money for anything will have details scattered across the net far and wide. Use different search engines to find details of that company and if you feel the details are just too "thin" then just take that company off your list. Shady companies are easy to spot because they are "in the shade" (hidden) and they don't have much information out in the open. There are so many good, solid, and reputable banks, non-banks, leasing companies, and investment firms out there so don't worry about dropping a few from your list.

Fake Phone Numbers and Fake Caller ID

If a lender calls from a phone number that is "close" to your own number (example: your number is 555-1212 and they call you from 555-1223 etc) then that may be an instant warning sign. If you must, call them back at the number they called you from and if you get dead silience or the classic non-registered phone message - mark that lender off your list. For some bizzare reason some of the more excited lenders will do almost anything to get you pick up the phone. If they need to fake a phone number or fake the caller ID - they don't deserve your business.

Read The Fine Print - ALL of it Matters

Before signing or e-signing any document always read every single word of every page. Even if you think "oh, this is just a standard document" - READ IT. It doesn't matter how large or small the lender is or if they are a bank, non-bank, or investment house. Read every word and even hire a qualified attorney to help you if are not sure of something. It's a whole lot easier handling things before signing than after signing. Sure, after you read the document, twice, it may be "just a standard document" but at least you know you read the document end to end. Many people get themselves into situations where a word or phrase is misunderstood and once signed and the ink dries, that misunderstanding can be costly. Just read the paperwork, and definitely hire an attorney if you are unsure of anything. A good attorney can often save your hide.

Not All References are Real

Did you know that almost anyone can write up a good reference on any company and once written that company can show the world that great writeup. Problem is, the company itself could have asked an employee to write up good references, and even friends of the employee could write them up too. While this may not happen with every company in every industry just be sure you research any lender (bank, non-bank, investment company) using more than just one web review service. Look around and often dig deep into the search results on the major search engines. One suggestion is to start on page 10 and go from there. Often times you will find some completely different reviews or comments on not-so-giant websites. References are great, both good and bad references, as it lets you get a feel for what others have experienced with the same lender. You may even find suggestions that could save you money with the exact same lender. The bottom line is do your homework and never trust just one site for references.

Avoid being "Cooked"

This is one term not many people have ever heard, but it's as real as the sunrise every day. There are some shady brokers (appearing as if they are lenders) that will accept your three months of bank statements, financials, etc. and will manipulate the numbers to make you look financially better than you already do, then they shop that information to other lenders. They are representing you with the "cooked" data (remember the old term "cook the books?") What happens next is you will get legitimate lenders that will then send you substantially large offers based on the bogus data. You may think "wow, this is GREAT!" but beware.....if you agree to those offers and you sign the legal agreements to accep the funds, you are actually committing fraud because in those legal documents are sections that state you agree the figures you provided are factual. Any time you start to get offers from lenders for amounts much greater than you were looking for, ask them what they based those offers on. Any lender worth their weight will share with you the monthly or annual revenue figures they believe your company produces. If the numbers look correct, that's great. But if the numbers look off or something doesn't seem right then chances are you've been "cooked" and need to discontinue discussions with that lender or broker immediately. There are not that many ultra-shady lenders out there but always keep an eye out for instances that seem "just too easy" becuase nothing is easy these days.