Beware of Small Business Loan Scams
With the potential of a full blown recession in the United States, there has been an increase in small business start-ups.
Starting up your own business in hopes of generating new found wealth is a good thing, but would-be entrepreneurs need to be careful when searching for that perfect business fit. Don’t get suckered into a deal that will make someone else money and not yourself.
A new trend that has hit the marketplace is prepackaged businesses opportunities, otherwise known as a “business in a box”. Often times these types of businesses are bogus scams. They are easy to fall prey to because those that are pitching the products are very convincing.
More times than not, these types of businesses do not yield the money that the promoters say they will. Small business owners need to be enthusiastic, but they must also be realistic.
Types of Business Loans
When considering this type of business loan, scrutinize each piece of information that is provided by the seller. It is important to go and see the potential business opportunity in person. Talk to people other than the person you are getting the sales pitch from.
Get all information in writing no matter how small of an investment they are asking for. If the promoter has to back up his claims in writing, it will be more difficult for him/her to rip you off.
Evidence of earning projections need to be provided before considering investing. Have a list of questions for the promoters and interview them in person where the business is in operation. Never conduct business over the internet without the potential of meeting in person. It is important to be face to face in order to spot false statements by fake companies.
Check with your state attorney general’s office and the consumer affairs bureau to see if any complaints or wrongdoings have been reported against a company, prior to handing over any money. If there are licenses required to run this business, check to see that all paperwork has been submitted.
There are twenty six states with business opportunity laws. It is important to know which ones apply to you before you begin the investment process.
State Laws for Loans
Most states have laws in place whereas companies cannot sell their business opportunities without providing potential purchasers with a presale disclosure document. These documents must be filed first with a designated state agency. Franchise investment laws are in place in fifteen states. The laws require franchises to provide presale documents to all potential purchasers prior to investing.
Before you raid your college or retirement funds, or take out a home equity loan, or deplete your savings, be sure to do your homework on any new small business endeavor. Check out our ZippyLoan Review and comparison chart before you apply. As the old saying goes, look before you leap.