5 Red Flags for Spotting Scammers in Small Business Financing 

Dec 4, 2023

Handling business matters online can make them simpler and more efficient, but it can also expose your small business to cyber risks. An FBI report found that Americans lost $10.3 billion to internet scams in 2022 alone. Scams are especially common in the world of small business financing since business owners’ personal information is needed for the process.  

Before seeking funding for your small business, it’s important to know what to expect regarding interactions with and requests from lenders. If someone claiming to be a lender makes an odd request or contacts you in a suspicious way, you’re likely dealing with a scammer.  

Scammers may try to trick you into giving them money or get your personal information to open credit in your name, access your bank accounts, or steal your identity. Catch these red flags as they happen to protect your small business from falling victim: 

  1. Seeking personal information from you over social media. The security of social media is never guaranteed, so a lender shouldn’t ask for sensitive information on any social media platform. However, social media can be helpful for getting answers from your lender to general questions.  
  1. Asking for money unexpectedly and urgently without prior notice. Throughout your funding process, you should always be aware of what payments you are expected to make and when. If you are asked to make a payment immediately that you haven’t heard about before, confirm with your lender that the request is legitimate.   
  1. Sending you an urgent message about protecting your account. Many successful scams encourage people to act quickly. If you receive a message over the phone, email, or social media that requires an immediate response with your portal account details, confirm with your lender before providing any information. 
  1. Calling you to offer login assistance that you didn’t request. Unless you’ve asked for help getting into your portal account, a lender shouldn’t call you about accessing it. Confirm with your lender before giving any account or personal information over the phone.  
  1. Requesting confidential information or documents outside a standard platform without talking to you first. Any materials you provide during your funding process should go directly through your lender’s portal. There may be exceptions if you ask your lender for an alternative method of providing documents or assistance uploading them. If you haven’t communicated with your lender about such arrangements, don’t submit anything outside of your lender’s portal. 

Knowing these signs is the first step to protecting your small business and your personal information. Please note that if you are a Lendistry customer, we will never contact you in any of the ways listed above.