CHARLOTTE, N.C. — Charlotte is growing, and so is the number of new and small businesses. According to the U.S. Small Businesses Administration, there has been a 62% increase in small business loans since 2019. It can be an exciting time for motivated entrepreneurs, but also a stressful one if you're not careful when applying for a new business loan.
Elijah McCoy is a commercial mortgage broker aiming to help entrepreneurs obtain loans for their business ventures. McCoy said the main challenge is not knowing where to get the funding for the business. This is the stage where poorly-prepared business owners can get fleeced.
"By not having your ducks in a row, you're vulnerable," McCoy said. "A lot of times what scammers do is they'll say, you may get an email, text, or call, 'Quick apply for a loan when we're giving a 2%. Rate of 1%. Hurry, hurry, hurry."
McCoy said if it sounds too good to be true, it probably is.
"Scammers promise loans will happen in one to two days," McCoy said. "Loans typically take 30 to 60 days to obtain."
He warned, in exchange for a quick turnaround on a loan, those posing as lenders will also ask for your date of birth, social security number, and address.
"They're trying to get your information to go do whatever they're doing or open up stuff in your name," McCoy said.
Scammers won't bother with the details of financial statements. In reality, McCoy said, that's exactly what legit lenders want.
"The banks review your files more in-depth," McCoy said. "They look for business plan income projections. They're checking your financials and your creditworthiness. And they will also want to see if you have what's now called a secondary source of repayment."
Another red flag is promising a line of credit at a very low rate.
"Rates right now are starting at 3.125," McCoy said. "So, if someone says it's available at one percent, It's all baloney."
Tip to avoid becoming a victim of a scam
Emotional appeal: Any pitch that ratchets up your emotion will inhibit your rational judgment.
Sense of urgency: You MUST act now, or else.
Request for unorthodox payment: Gift cards, prepaid credit cards, wire transfers, etc.
Explanations that don't ring true: If your new “landlord” can’t show you the inside of the house, that could be because they don’t own it.
You won, now pay up: It’s not a prize if you have to pay for it. Taxes, fees, shipping, whatever.
Too good to be true: That’s because it’s not true. Sorry, your long-lost relative didn’t die, leaving you millions. That car you bought online for a third of its Kelly Blue Book value doesn’t really exist. The son of a billionaire diamond broker didn’t “swipe right” on you and fall instantly in love. That work-at-home job paying you hundreds of dollars an hour for stuffing envelopes isn’t real.