“Secured loan approval; receive funds within 24 hours. “No credit check; interest rate starts at 0%; only a low application fee is required.” These statements may sound good enough to a small business owner who is in desperate need of capital.

But, as the old saying goes, “If something sounds too good to be true, it probably is,” says Carolina Martinez, CEO of CAMEO, the state of California’s microenterprise network. Just because it’s the most common attractive solution you hear doesn’t mean it’s the right solution, she says.

Many small businesses are still recovering from the financial impact of the COVID-19 pandemic, and with the end of the paycheck protection program and bank loan approvals below 20%, scammers and predatory lenders take the opportunity to settle on companies that are looking for financing.

Protect yourself from potential bad actors and find legitimate capital for your business with these four tips.

1. BEWARE OF SPEED

Speed ​​isn’t always better when looking for business financing. “Beware of quick selling,” says Tom McHale, president of Pursuit, a community lender operating in New Jersey, New York and Pennsylvania.

While some online lenders are great at being quick, predatory lenders can rush you through the loan process to push you into an expensive product without fully understanding the terms.

“You’re going to pay much higher rates and fees for this money than for traditional financing which might take a little longer,” McHale said.

He recommends that businesses look for lenders that allow them to speak directly to a representative – rather than just a bot or live chat – so you can ask questions and understand the terms and conditions of the loan.

And if a lender is unwilling to show you the terms and rates of the loan up front, that’s a red flag.

2. NEVER PAY MONEY IN ADVANCE

“Don’t pay money up front to be able to get a loan,” says Frank LaMonaca, president of the Southeastern Connecticut chapter of SCORE, a network of volunteer mentors that supports small businesses across the board. country. “You should never have to do this.”

A reputable online lender will not charge any fees unless you are approved for a loan. If a lender wants money just to watch your claim, that’s a dead giveaway, says La Monaca.

“No one should be asking you $ 2,500 to apply for a loan. You should be able to apply for free, ”he says.

Likewise, don’t trust emails that appear to come from government agencies asking for personal information like your social security number, requesting an upfront payment, or guaranteeing loan approval. The US Small Business Administration recommends being on the lookout for these phishing scams, as well as other types of grant and loan frauds, especially those related to COVID-19 relief aid.

3. EXPLORE ALL YOUR LOAN OPTIONS

Businesses may have more financing options than they realize.

Understand your power in the market, says LaMonaca. There are a variety of loan programs to choose from, including those aimed at specific types of businesses, such as women-owned businesses, minority-owned businesses, and veteran-owned businesses.

Community development financial institutions, known as CDFI, nonprofit lenders, and reliable online financial services companies can offer loans at affordable rates and on competitive terms, even for new or new businesses. who cannot claim bank financing.

Some of these lenders, like CDFIs, can help businesses burdened with predatory loans refinance into better products, Martinez says.

You can search for local CDFIs on the SBA website, as well as through organizations like Opportunity Finance Network, the national association of CDFIs. Reading reviews and referring to resources like the Small Business Borrower Bill of Rights can also help you find reliable lenders online.

4. SURROUND YOURSELF WITH THE RIGHT EXPERTS

If you don’t know how to find the right financing for your business, or want to make sure you’re not signing a bad deal, turn to the experts. You can work with an accountant, lawyer, or other financial expert to help you through the process and even to review your loan application and agreement.

The majority of CDFIs come with a comprehensive support ecosystem to help small businesses assess their financial position, business models and strategies, as well as access capital, says Martinez.

In addition, organizations such as SCORE and the Small Business Development Centers administered by the SBA provide free business advisory services. You can search their websites to find experts in your area to work with your business and browse for additional online resources.

LaMonaca emphasizes the importance of building a team and nurturing relationships to help you run your business – the best business owners don’t go it alone. “The best have great people around them,” he says.

This article was provided to The Associated Press by the NerdWallet personal finance website. Randa Kriss is a writer at NerdWallet. Email: [email protected]