Don't Become a Victim of Fake Financing Scams

With small business credit getting tighter by the day, more and more innocent business owners are falling victim to crooks and thieves that are determined to separate honest business owners from their money.

In the last several weeks my business partner and I have encountered several of them. We have heard of many more. In each case I am personally aware of the business owner was seasoned and not the gullible type.

One scam which nearly got pulled on the president of a $30 million dollar a year business involved a fake equipment leasing company. The business needed to lease about $250,000 in equipment as soon as possible to service a new account. Though this business has been profitable for many years, their normal bank and other lending sources weren’t making new loans, so the president using a search engine contacted what turned out to be a fake leasing company in California.

The businessman sent the fake leasing company all kind of financial and personal guarantor information. A day later the leasing guy called the business and said the leases had been approved and all he needed to do was to send by overnight mail a check for $16,000 as a security deposit. The president was prepared to send the check when my partner heard about the story.

My partner called the business owner and asked him to wait a couple of days while she checked out this supposed "leasing company."

A little sleuthing uncovered that the address of the leasing company was a vacant lot. The phone number was a cell phone number. She inquired with several of the equipment leasing associations to determine if this company was a member of any of them and couldn’t find any membership. The leasing company wasn’t listed in the local white or yellow pages and the Web site of the leasing company was a one-page front with several other pages "under construction." The address where the company president was to send the check was a private postal company address.

My partner, who can be pretty forceful at times, called the phone number of the fake leasing company. When she tried to get additional information from the gentleman who answered, he refused to provide any and hung up. Her suggestion was for the business owner to refrain from sending the check unless he could verify the company he was supposed to do business with was legitimate. That ended that story.

A few days ago a business owner with a solid business called us and said they had received a fax indicating they had been "pre-approved" for a $100,000 business line of credit. All the business owner had to do was call the toll-free number to set up the loan account. My partner went through the same sleuthing she had done with the fake leasing company. Although we can't prove it, we believe the fax sender is trying to get social security numbers and identity information so they can steal identities.

Our country's terrible economic situation is bringing out the best in many people. Caring people all over the U.S. are helping shelter their neighbors who have lost homes. Businesses are doing everything they can to keep from laying off more workers.

But it is also times like this that bring out desperate people who will do desperate things to survive. Then there are the habitual frauds of the world who are taking advantage of these times to steal from business owners who have never had to look to such extreme measures as thinking that a blast fax may be from a legitimate lender.

Don't be the next fraud victim story. Be careful who you do business with and especially be wary of business arrangements where you have to send money as part of a nebulous application fee. Remember, if it sounds too good to be true, it probably is.

Sam Thacker is a partner in Austin Texas based Business Finance Solutions.

You may contact Sam directly at: sam@lesliethacker.com

or follow him on Twitter: SMBfinance

EXTRA: If you have questions for Sam regarding business financing, the credit market, and similar issues, please send an e-mail. Your questions will be recorded and Sam will answer the best ones in his Ask the Expert podcast show.