Unsecured Small Business Capital Loans

Q:Here's a very strange coincidence. If you go to the site that you are asking for "advice" on, and then go to domain name in your return email address, it's the same web page. Isn't that odd? Plus, the same web page has all kinds of other get rich quick schemes on it and no business address, phone number or other way to contact you other than an email address to yet another domain. Very peculiar indeed.

A:For the rest of you who might have been tempted to investigate this fabulous opportunity, be cautious of these kind of things. There are lots of people in this kind of business who are very good at pulling the wool over your eyes and looking very legitimate (and this ain't one of them). Having had some exposure to the world of business loans, I can tell you that there are companies that make money primarily through non-refundable "application fees." This is a very common scam. They will tell you about how they have these private investors who like to fund business loans at a premium interest rate. They might tell you that 90% of all their loans get approved or something like that. They might say their investors are Saudi sheiks or Hollywood superstars or the Sultan of Brunei or something else indicating they had more money than they know what to do with. Sounds plausible and most people who have already been turned down by every bank in town are more than willing to agree to 18% or 25% or whatever to get the cash. They get a check from you for a few hundred up to several thousand dollars or even more and then after a few weeks they'll just say the loan wasn't approved. The truth is, they just waited for your check to clear and there was 0% chance of you getting a loan to start with. However, legitimate lenders do charge application fees, so it might be hard to separate the frauds from the legitimate lenders. One thing you can do is check with your state department of banking and finance or whoever regulates lending in their state to see if they have had any complaints about the lender. But they might not have even heard of them and that doesn't mean they're clean, just that nobody has complained yet or it's one of many false identities (ring a bell?). There aren't tons of private investors out there aching to help out a small businessman even at ridiculously high interest rates. In fact, there aren't a lot of investors out there seeking to fund new businesses at all. About 90% of seed capital comes from two sources: your own funds, including savings, cashing in 401k's and maxing out credit cards; and second, loans from friends and family. The venture capitalists you hear so much about provide well below 1% of seed capital. SBA-guaranteed loans might be an alternative, but they're not that easy either. Most of the time you need good personal credit (you will have to personally guarantee the business loan), some assets that they could seize if you default and in most cases they want to see at least two years of cash flow or some other source of income (like a spouse's salary) that can show you will be able to support the debt service. Most startups don't meet those criteria, but if you think you might, there are dozens of banks and other legitimate lenders who would love to have your business and I wouldn't be shopping for funding from a lender who can't even afford his own legitimate Internet domain! If it's too good to be true, it's probably a rip off of one kind or another. One rule in lending money is you only lend money to people who don't really need it. If after reading this you still believe in Santa Claus, my advice would be not to pay an application fee that is more than $200-300 regardless of what the supposed lender says. On the other hand you could buy $200-$300 worth of lottery tickets and that would probably be even more likely to generate the cash you want.