No one needs to tell a small business owner how vulnerable he or she is—the business owner knows it better than anyone. While larger businesses and corporations employ full-time analysts and lawyers to watch their collective back, small business owners must do without that luxury, which, in turn, earmarks them for lending scams and swindles—one of which is the “pre-approved” small business equipment leasing grift. And, what starts out as a promising offer of savings turns into a giant financial and operational headache, bilking business owners out of potentially thousands of dollars. But, there are strategies and tactics to lessen and ultimately avoid scams in this general vein—the first being: Always be suspicious of the “too good to be true” scenario.
As an entrepreneurial rule of thumb, business owners should immediately pay special attention to offers with dubious phrasings—“pre-approved,” “no credit limit,” and “instant approval” are some popular catch phrases of sketchy lenders.
The most common scam tactic begins when lenders issue declarations (usually to entrepreneurs with poor credit history, who are unable to secure quality loans from reputable lenders) that you or your business has been pre-approved for a small business equipment leasing arrangement. Afterwards, potential borrowers are asked to fill out some “routine contact information,” in order that the lender can send the equipment. In actuality, the “routine contact information” turns out to be nothing more than a loan application (which can sometimes come replete with application fees—which, of course, will be titled under an innocuous sounding euphemism). Next, the “pre-approved” rate quoted by the lender will suddenly skyrocket due to some credit history anomaly (which the lender had full knowledge of before soliciting the small business equipment leasing arrangement) making the loan little more than a thinly-veiled scam. Unfortunately, the equipment itself, ordinarily, has been scheduled with the equipment provider, making canceling a potentially expensive option (since the company will go after you and not the lender).
All this boils down to one simple aphorism: In business, if something sounds too good to be true, it’s not only not true, it’s probably a swindle of some kind. Small businesses and their owners are forced to lean on lending options for securing large-scale industrial and commercial equipment due to the enormous up-front costs. Entrepreneurs should exercise extreme caution whenever dealing with lenders in this capacity (since, many times, the actual business is used for collateral). There is nothing inherently dicey about small business equipment leasing—99 times out of a hundred it is a profitable, win-win situation for all parties involved. But, business owners must confront the peril constantly present in lending or leasing situations—in essence, coming to terms with the plain and simple fact that there exist malevolent swindlers under the guise of “lenders.”
Avoiding threats to your small business begins with evaluating the companies you associate with. Take some time to investigate a corporation or company’s financial past for signs of fraudulent or dishonest practices. The Better Business Bureau (found on the web at www.bbb.com) proves an excellent means to this end. With up-to-date articles on the latest swindles and grifts, the Better Business Bureau acts as a watchdog for small businesses— and it’s also free of charge. In fact, the BBB could be the only thing in business that is, actually, too good to be true.
By Jean-Pierre Lacrampe
America Funding Network - The $10K to $1,000,000,000 Loan Specialists: Unsecured Loans, Hard Money Loans, Sale-Leaseback, Equipment Leasing, SBA Loans, Commercial Real Estate, Bridge Loans, Re-Financing, Note Purchasing, Accounts Receivable and more. We Accomplish Our Client's Goal...Raising Cash!
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