Be careful when looking for lenders

Posted by Christina Lopez on September 26th, 2010

Entrepreneurs are at risk not only of being gouged by creditors with excessive interest rates and fees, there are also so-called “loan experts” that may be more dangerous.

If you find a company that promises to get you a cash loan in exchange for an up-front fee, beware.  I have worked with hundreds of clients who prior to coming to us had been taken by one of these so-called loan expert companies.  Their scam follows a pattern: When you call or fill out an online form for funding, they lead you to believe they have a lender that can help.  They put you through the hassle of filling out document after document.  At times they’ll even say you’re approved but add that they “just need one more document.”  Then, just before you get the money, they call and say the lender is charging some unforeseen fees and in order to finish the process they just need X number of dollars sent by check or wire.

I have had clients spend as much as $200,000 looking for a $20,000,000 line of credit.  In most cases, these companies require between $5,000 and $25,000 in fees before they can “release funds.”  Then you never hear from them again and in a few months the business phone lines and contact information show they are out of business.  By then they’ve moved to a new location and are taking money from someone else.

Take my advice: When you hear a guarantee of a line of credit or cash loan in exchange for an upfront fee, just stay away.

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