Businesses In Need Of Cash Should Be Wary On The Web

WALLINGFORD — Better Business Bureau is issuing a warning to small business owners looking for loans and grants on the Internet: be very, very cautious. A growing number of businesses are looking for alternative sources of funding because of the credit crunch, but a number of companies are asking for sizable up-front fees for construction loans, and not delivering the promised funds.

Connecticut-based Mediations, LLC (also doing business under the names Northeast, LLC and Innovations N.E., LLC), asks for hefty up-front fees for construction loans, ranging from $1,500 to $26,000, and requires applicants to pay by wire transfer or cashiers check only. To date, complaints to BBB Connecticut reveal losses topping $110,000. 

A BBB Reliability Report on the activities on Mediations, LLC is available at www.bbb.org, under “For Consumers/Check Out a Business or Charity.”

BBB Connecticut President and CEO Paulette Hotton said these small businesses are being hit when they are extremely vulnerable.

“Many small businesses are struggling to stay afloat during these difficult economic times, and they can be easy prey as a result of their desperate search for alternative means of funding,” she said. “The Internet is a perfect platform where unscrupulous operators in the loan industry can easily portray a professional image that can give small business loan applicants a false sense of trust.”

Complaints have been made to BBB about other companies who target small business owners with online offers for government grants. BBBs across the nation continue to receive hundreds of complaints about this practice. The scheme involves spam e-mails that drive grant-seekers to fraudulent companies operating on professional-looking websites. 

The hucksters promise owners to help secure thousands of dollars in government grants to start or expand their businesses, but not before the targets pay hundreds of dollars by wire or money order, never to hear from the phony companies again.

Business owners should never have to pay large sums of money up front to receive loans, nor should anyone wire payments for services, because they will have no way of getting their money back. The BBB recommends business owners be extremely careful when providing bank and other financial details, and insist on reviewing all details before making a decision and signing a contract.

Businesses seeking underwriting from online sources should check out the would-be lender’s operations by visiting the BBB website for a free Reliability Report.

“If you would like to apply for government assistance, you may search for free at the official US government website, www.grants.gov,” Ms Hotton reminds business owners. “If your company does not qualify for a grant, the US government does not request any payment as part of the application review or grant awarding process.”

Find more information on lenders, as well as additional advice on how small businesses and consumers can avoid becoming the target of fraud when searching for loans and grants, by visiting www.bbb.org.