You must have heard of the saying “prevention is better than cure”. While it applies to several life situations, it holds especially true when making financial decisions for your business, like taking a loan. While business finance is a convenient way to get quick funds to ensure seamless functioning, it is also most susceptible to fraud.
But with due diligence and a better understanding of the red flags, you can easily save yourself from falling into a potential debt trap. Here are five tips to help you avoid business loan scams.
1. Be wary of unknown calls
Do not indulge if you get a cold call offering a loan at a business loan interest rate that is too good to be true. Scammers usually pretend to be a trusted source, claiming to be from a well-known company. They ask for information in the guise of offering you financial help. Remember, genuine lenders don’t ask for your bank account details or credit card number over the phone.
Since these are unsecured forms of communication, it is best to avoid sharing any personal or financial details over them.
2. Go for credible lenders only
Since your financial safety is solely in your hands, you must adopt a proactive approach. If you’re looking for business finance, act diligently and contact credible lenders only. Perform thorough market research about the various lenders and their prevalent offers. Also, look out for customer testimonials and reviews online. Doing so will help you avoid falling for a business loan fraud.
Additional Read: Useful Steps on How To Negotiate Business Loan Offers
3. Verify lender’s website
Although verifying the lender online is a critical step, not all search results are genuine either. When you visit a lender’s site, always pay attention to their website address. It is a glaring red flag if it has an HTTP:// protocol and not the encrypted HTTPS://. It is a potential sign of fraud because the website can make use of your information.
A reliable lender will not compromise your privacy and security, so it is important to double-check the website address before applying for any offer.
4. Avoid links from unknown sources
While the digitalisation of loan facilities have made our lives easy, it has also made it easy for the scammers to reach people at any time. You might get tens of promotional emails from various companies every day, offering business loans at attractive terms. But even when an email looks authorised, you must verify the sender online.
You can consider setting up multi-factor authentication or getting security software on your computer to avoid such emails.
5. Scrutinise the loan offer
No lender asks for money before the approval of your loan. If they do, be certain that it is a scam. Although most financial institutions ask for application and processing fees, the amount is deducted from your sanctioned loan. So if someone is demanding an upfront payment before advancing the loan, steer clear from it.
Additional Read: Business Loans: Fixed Rate vs Variable Rate
The bottom line
Stay away from loan frauds and fulfil your business needs with Tata Capital! Our wide range of loan products allows you to meet your business’s growing financial needs at the most affordable interest rates.
Use our business loan EMI calculator to calculate your monthly payments and chalk out a budget today. Get in touch with us today!