Upfront Underwriting Fee Scams Still Persist
“Based on what you’ve shared, you qualify for a $50,000 loan, so now you just need to send in the application along with a check for $500 to pay for the underwriting.” SCAM!
Many Merchant Cash Advance(MCA) sales reps encounter business owners who have been so defeated by scams, that they are skeptical when something legitimate actually comes along. Some MCA providers may assess fees at the time a deal is funded, but at no point should a business be expected to make a payment prior to that. Think about it: If you are paying just for the opportunity to be considered for a loan, what financial incentive would the lender have to actually make loans? They can simply tell you that you have been declined and walk away with the fee.
The issue does not seem to persist in the MCA industry itself, but rather by con artists pretending to be traditional lenders. According to Dun & Bradstreet:
“Be especially wary of unsolicited phone calls, emails, or letters from prospective lenders making claims that sound too good to be true. If a prospective lender guarantees a loan without checking your credit or reviewing your business plan, proceed with caution. Also beware of lenders who cater to applicants with bad credit, pressure you to make a decision on the spot, and lenders who request payment by Western Union to foreign addresses.” Full article From D&B here.
We’re not looking to scare anyone, but you can never be too careful. Most of the MCA providers in our directory are listed with the Better Business Bureau. When in doubt, check them out!
-The Merchant Cash Advance Resource
Last modified: February 21, 2013
Sean Murray is the President and Chief Editor of deBanked and the founder of the Broker Fair Conference. Connect with me on LinkedIn or follow me on twitter. You can view all future deBanked events here.
