Are Online Small Business Loans Safe?
Nowadays, business owners can access financing through small business loans through simple apps. It’s more appealing because it seems to eliminate the bureaucracies that come with traditional lenders and financial institutions.
This online loan option has proven to be a safety net for small business owners over the years. However, fraudulent individuals took the opportunity to prey on any opportunity for unsuspecting newbies. If you do it right and verify what you sign, online financing can be easy and useful for you.
How to recognize safe online lenders
If you are looking to get small business loans from an online lender, you need to check off a basic checklist. Before submitting any information, you must confirm if they have a physical address. Additionally, you need to make sure that your potential online lender has measures in place to protect your information or data.
Here are some attributes to check out when obtaining a business loan from online lenders.
Strong security protocols and tight encryption
Online lenders protect their clients’ information from hackers, they use the highest level of encryption to protect their website. Most of them use the Transport Layer Security protocol.
One way to tell if an online lender’s website is safe is to check their URL. If the address begins with “HTTP” instead of “HTTPS”, it is not secure. The “s” means the website is secure. Another way to be sure is to check if the website has a security certificate from the security companies.
Perform a background check
You can perform a website background check using the WHOIS website. You can know the launch date of the website and its owner. If the website is new enough, you need to exercise caution and investigate further to make sure you don’t fall into the wrong hands.
Check reviews online
It’s easy to tell if a business is legitimate by typing its name on any search engine and using the keyword “review” or “feedback”. If you are considering an online lender, type the name on Google and find what people are saying about it. This way you can know whether you are frequenting the right service or not.
How to spot a fraudulent online lender
If you need an urgent loan and traditional financial institutions aren’t available, an online lender can be a quick option. But you have to be careful to spot online loan scams.
Here are some features to check out
They ask for an upfront payment
Fraudulent people or organizations, which are not even remotely linked to the loan, will ask you to make a prepayment when applying. Once you have paid they will disappear and you will not hear them again. A reputable lender will not ask for money up front. If that happens, don’t act with them.
Little information about them online
Fraudulent lenders do not have an online history. If they do, that would be bad reviews from people they’ve swindled before. Always pay attention to information such as their physical address and other details online.
They contact you first
Reputable online lenders cannot contact you personally with a loan offer unless you contact them, complete an application, and get approval first. You will also notice that they are aggressive and aggressive if they notice that you are reluctant to do business with them. It would be better to look elsewhere if you notice this.
All things Considered
Small business loans are a good source of finance, but you need to be careful when considering the online option. The last thing you need is to fall into the hands of scam lenders and lose money in the process. With the steps listed in this article, you can check for yourself whether an online lender is safe or not.