If you run a small business, the ability to evaluate commercial or business financing options is essential. But is online loan insurance safe?
Online business loan insurance safe?
At some point, your business is likely to come to a critical juncture where you’ll need a cash infusion – either to help cover the operations for a limited time or to fund a growth initiative to take your business to the next level. When borrowing is the only choice, startups and new businesses, unfortunately, have historically been left with few options. Thanks to the advent of online loans, today’s small businesses have an alternative to borrowing money that is convenient and quick.
However, before doing business with an online lender, it is important to check if the lender is legitimate and if the identity of your company will be in safe hands. These are the first steps to make sure your online loan is safe. Identity theft costs millions of dollars to victims each year and cash-strapped business owners have become important targets for cyber thieves and fraudsters.
The good news, however, is that the advancement of financial technology has made online loans safer. Here are some basic facts you need to learn about online loans so you know which lenders are legitimate.
How to identify scammers and fraudsters
The number of money-driven scams or the identities of business owners has increased significantly in recent years. In most cases, a scam will find the victim owning a business through an email or text or a malware ad that appears on a web page.
The best defense against any kind of scam is to apply the test “if it sounds too good to be true, it probably is. After all, the indicator if the online loan is secure will be the legitimacy of the site and not if it gives you all the advantages of hand kissed. Also, being aware of the different ways cyber thieves and fraudsters operate makes them easier to spot. These are some of the most common red flags that business owners can find:
Loan brokers work to combine the business owners with the lenders that best meet their needs. For this, monthly fees or commissions are paid by creditors.
If you are approached by a loan broker, either online or by phone, you ask:
- an initial fee such as registration fee or credit verification fee;
- an advance or any other financial prerequisite, leave .
This is not a legitimate loan broker. Lenders may charge a loan fee, but this only after the loan is approved.
No physical address
Even if you deal with lenders online, legitimate lenders have physical addresses.
Before engaging in any conversation with a lender representative, search the site for information about the company, including its physical address, history, and leadership team.
Always check that the address is legitimate because many online loan scammers operate outside of Brazil. Never accept an external zip code as a legitimate address.
Cash Advance Loans
Some business owners may be tempted by offers of $ 2,500 deposited into their accounts within 24 hours – no solicitation, no credit check, no waiting – because they know they can pay the amount in a short amount of time.
But it is not the higher rates or fees they pay that should be their main concern. It is the fact that many cash advance operators belong to a national or global network of creditors.
Once you provide your personal information to one, it will likely spread through the network and there will be no guarantee that it will not be sold to other types of predators.
Characteristics of a legitimate online financier
If you are considering an offer from an online lender, there are several things besides a physical address that you should look for before providing any personal or professional information.
The good news is that the development of financial technology has made it easier for legitimate lenders to protect their information. And for business owners to identify legitimate online lenders by ensuring that the online loan is safe.
To identify whether the online loan is secure, check to see if the potential lender has the following features on your site:
Strong encryption and security protocols
Legitimate online lending sites use top-level encryption to protect your information at both ends of the transaction along with the Transport Layer Security (TLS) protocol to ensure that they are sent safely.
On any site that you want to provide sensitive information, make sure the URL in the address box begins with “https”, not just “http.” The “s” means that it is a secure site.
You can also ensure that a site has been certified as secure by looking for a security certificate from a company such as Verisign.
Site Background Check
You can conduct a background check of a site by searching the “WHOIS” database at NetworkSolutions.com. There you can find out when the site was launched and who owns it. If the site is relatively new, it may be a red flag, requiring more research.
Check the complaints
In your search engine, enter the word “complaints” next to the company name.
Companies with few complaints may not be a problem, but if the complaints far outweigh the positive comments, it’s a big red flag.
Check the Claim Here website , Protest or Consumer.gov may also reveal a pattern of complaints. If the company does not have a good problem solving profile, you should probably move on.
Platform lenders are a relatively new type of online lender and are pioneers for business owners to obtain loans online.
Instead of evaluating a business just for its credit score, platform lenders tend to use more innovative, flexible, and data-driven methods to assess credit quality, such as looking at the company’s social media activity and sales revenues online.
They also require business owners to provide valid proof that their businesses are legitimate and worthy of credit. Even if a company is new and has no credit history, platform lenders can issue loans even when traditional banks do not.
Unlike cash advances, platform lenders generally charge interest and fees that are more affordable, potentially more than a credit card.
Although the burdens depend on the loan application and the specific financial situation, the platform lenders are often able to fill the gap for many business owners who need loans but can not find a suitable agreement based on the traditional model of loans for small businesses .
You can find online platform lenders, but before choosing one, be sure to do your research and weigh the various advantages of different lenders and loan offers.
After all, is online loan insurance safe?
Business owners looking for an online loan need to do the due diligence before providing any personal information.
The good news for small businesses is that online lending growth offers a source of money when it is most needed and there are a number of legitimate and reputable online lenders to choose from.
The bad news is that unscrupulous lenders and scammers are becoming more relentless in their efforts to take advantage of the vulnerable, cashless business owners who are unaware of their options.
Fortunately, financial technology has made it easier for entrepreneurs to evaluate how lenders are legitimate – and for lenders to quickly determine the credibility of companies.
So yes, online loan is safe. Just do the whole process with care and attention. From research to choice, to document submission, make sure the safety and credibility of your lender.