Business Loan Scams

Last post: Dec 6, 2019

It’s easy these days to get caught up in scams. Whilst it’s rarer than ever to receive emails from Nigerian princes who need freeing promising you gold and riches, sophisticated, targeted fraud that is difficult to detect is on the rise. Advance fee fraud is a common attack, and whilst it’s one of the best known and well documented techniques, it’s also very easy to fall for if you’re not cautious enough.

How does advance fee fraud work? 

Fraudsters expertly find ways to make their scams sound like legitimate business opportunities. This could be by proposing investment opportunities, great advertising rates, or business loans.

Business loan scams are one of the most common types of fraud for small businesses to fall for. Securing a loan for a new or independent business can be really tricky, and if you're a small struggling business it can be even harder. Scammers play on this by contacting the victim - usually by email or cold call - and pretending to be a genuine, reputable business loan company. They offer the victim a business loan, with low interest rates and a guarantee that the application will be accepted - with the caveat that the victim has to pay processing fees or certain administration costs upfront in order to apply. They will take the payment and then disappear, or continue to string the victim along for more fake payments. 

The scammers also apply pressure, telling the victim the offer is limited or that they are the only one that will offer them a loan. It's vital to remain cool-headed when dealing with any financial matters, as legitimate loan lenders won't put time pressure on offers, offer loans via cold call without prior contact from the business, or guarantee upfront approval for a loan. They also won't ask for payment upfront: brokers may have origination fees, but these won't be charged until after the loan is granted and paid. 

How to avoid business loan scams

It's difficult to be savvy under pressure, and it can be really scary having loan applications declined, especially if you're a small start up business. It's vital to remember to stay calm, be cautious and remember that if an offer sounds too good to be true, it probably is. 

If you're unsure about the validity of a loan lender or business opportunity, do your research on the company/broker. Remember to keep thorough records of any places you have applied for loans and any brokers you have gone through. Cross reference any offers to ensure that they correspond with that you've applied for.

At Choice Business Loans, we care about businesses and their finances. We know how hard you work for the money you make, and how devastating it can be to lose it. That's why we want to educate businesses both large and small on the threat of scams and how they can safeguard themselves. Business fraud is becoming more and more sophisticated, so it's really important to be aware and up to date on all the latest scams and how they work.

We deal with a wide range of lenders and specialist brokers and have the knowledge and experience to examine different finance options and make suggestions to suit our clients. We can look at anything from a traditional bank loan, to Crowdfunding, Fintech lending, Merchant Cash Advances and similar innovative options.

Drop us an email at or call us on 01494 410 125 to speak with one of our team about what kind of help we can offer you.