Securing an online small business loan may seem convenient, but lacking the knowledge to do it properly, a small business owner might end up losing sensitive information to a hacker who can, in turn, steal the owner’s credit card, digital identity, and even cash. Below is a true account of what happened to an unfortunate borrower. Note that names and places have been redacted to protect the identity and privacy of the victims.
Jose Gonzales and his wife had been saving money to open an auto detail shop in El Monte, California. After saving for 2 years, they decided it was time to commit. However, they were still $12,000.00 short so they decided to apply for a loan with a bank. Jose’s credit score is not perfect so he couldn’t get a loan from a bank.
Out of the blue, they received an email from a potential online lender. The subject read: “ATTN: Business. Low Rates up to 3%. Hurry before offer expires”.
Out of desperation, Jose clicked on the link in the email and applied on the lender’s website. Two days later, he got a loan offer. Excited, he followed the instructions to provide financial documents via a generic Gmail address. One of the conditions for the offer was that the applicant would have to submit a processing fee of $500 before the loan could be wired to Jose’s bank account. Without thinking too much, he sent $500 to the lender using Western Union.
He never heard from the lender again.
In this practical blog post, Camino Financial shows you how to get an online small business loan easily and securely, without having to suffer like Jose did.
4 Steps to Securely Get an Online Small Business Loan
1. Prepare all the required documents
Preparation is key to getting the best terms in the shortest amount of time possible. Before even applying for your online business loan, the most important thing is preparing the documents an owner may need to apply for a loan. Most online lenders look for a digital copy of driver’s license, company incorporation documents such as Article of organization, and bank statements. For SBA loans, most lenders would even require a proper PDF scan of documents or official PDF files from places such as Internal Revenue Service that prove the company applying for a loan has a strong cash flow and positive economics. For connecting bank accounts, username and password of your bank information would be required. Typically, an owner should spend one weekend acquiring the necessary documents and information. Once ready, these documents must be securely stored on one’s computer or cloud drive such as Google Drive for easy upload later on when applying for the online small business loan. The computer or mobile device on which the documents are stored should be password protected and encrypted, if possible. Try not to leave the documents in a USB drive, which can be stolen or lost easily.
Learn here how to prepare your business for a loan
Most common lenders offer an online calculator to help find out what the interest rates might be. Use that to get educated! Camino Financial offers a calculator to help our clients get more knowledgeable about online small business loans.
2. Review for signs of an established online presence and a secured website before applying
The ability to spot a fake lending website or lending company is going to be your best safeguarding skill from this point on. Do this before applying for your online small business loan. For example, if you come across an email from Camino Financial which contains a link to visit the website “www.kaminofinancial.com” or “www.camnofinancial.com”, these would be considered phishing emails because these are not official websites of Camino Financial, which is “www.caminofinancial.com”. Once you are interested in a company, Google its name online. Look for reviews on Yelp, Trust Pilot, Google Reviews, etc in order to get a good understanding of other people’s experience with the lending company. The number of stars and positive reviews is critical here. Sometimes, a good lending company should have press coverage on major media. For example, Camino Financial has been seen on CNN Money, Discovery Channel, Univision, etc. Try to verify those sources by searching the company name in the Google news section. More importantly, trustworthy sites have SSL certificates so that you would visit the site using HTTPS, instead of HTTP. This is what makes a website secured by encrypting any sensitive information like social security number, ITIN or company financial information. If the site uses HTTP only, most likely it is a fraudulent website and using it is considered very risky!
3. Be vigilant in any communication with the company through phone or other means
When deciding which lender to go for your online small business loan, being careful on lender website itself is simply not enough. Hackers can also attempt to scam by posing as a representative from an online lender. The most frequent method used would be through email and phone. How do I recognize if an email is fake?
- Display name of the email could be fake
- The subject line containing a congratulatory message that is too good to be true
- Never respond to an email requesting personal information to be sent via email
- Unrecognized email signature
- Poorly formatted email template with spelling and grammatical errors
What about phone calls? Similar rules apply.
- Most lender representatives won’t call you out of the blue. No matter how legitimate the reason may sound, always politely decline the call and try to call the main line of your lender: request to speak with the account manager to verify if the call received was legitimate.
- If you happen to call the main 1-800 number of a lender, most likely you would be asked to provide personal information and/or information from the online loan application in order to verify your identity.
4. Credential management can save you from looming troubles
Remember those moments when you are scratching your head and wondering what was the password entered for the website? First and foremost, DO NOT WRITE these passwords on a sticky note next to your computer. This the best way for hackers to get into your account. If you have to, download LastPass – a password management tool – to help you store and retrieve your passwords. Fortunately, Camino Financial uses a passwordless logging mechanism which is secure, convenient and painless.
5. Keep an eye out for your loan terms and what the lender is telling you
When in doubt, there is always a good advice to keep in mind: there is no such thing as free lunch. Once you have applied for a loan, the next obvious thing is to see what terms have been presented by the lender. Carefully review the terms offered – scrutinize the interest rate, the loan amount and the repayment terms of the loan. These numbers are created through a series of formula and algorithm based on your personal credit score, business credit score, business finances, credit cards in use or existing line of credit in use. So if you see a loan term that is too good to be true, be sure to call the lender directly and get a verbal verification first, and review the lender online from other sources. Also, if at any time a lender is asking for money up front, like a processing fee or a strange payment, there is definitely something fishy.
Download here the Ultimate Guide to Getting a Business Loan
At the end of the day, there are 3 things to keep in mind when it comes to applying for an online small business loan: security, security and more security. Be mindful of what you are sending, who you are sending it to and how you are sending it. If you do it right, you’d be able to get your money in no time and with great loan terms for your business. At Camino Financial, we take your privacy and security very seriously. We strive to offer you loan transparency. And you can rest assure your financial and personal information will remain safe during the whole process of applying for one of our online loans. If you still have questions, simply contact us. We would love to hear from you!