SBA Scams: What You Need to Know

The Incorporators has recently learned of concerning reports of fraud related to the current Small Business Administration programs.

Since many of our clients will be utilizing the SBA programs during this turbulent time, we wanted to take a moment to go through some things to keep in mind as you navigate the application process.

The SBA has categorized potential fraud into three categories:

Grant Fraud

What this might look like: You receive a phone call from someone claiming to work at the SBA regarding a grant application. They may ask for personal or business information.

What you should know: SBA does not initiate contact on either 7a or Disaster loans or grants. If you are proactively contacted by someone claiming to be from the SBA, suspect fraud.

Loan Fraud

What this might look like: You receive a marketing email from someone who offers you an immediate loan to hold you over until your SBA loan comes through. The loan has a high interest rate or the scammer requests an up-front payment and promises to get you the SBA loan.

What you should know: If you are contacted by someone promising to get approval of an SBA loan, but requires any payment up front or offers a high interest bridge loan in the interim, suspect fraud.

SBA limits the fees a broker can charge a borrower to 3% for loans $50,000 or less and 2% for loans $50,000 to $1,000,000 with an additional ¼% on amounts over $1,000,000. Any attempt to charge more than these fees is inappropriate.

Phishing

What this might look like: You get an email with the SBA logo at the top, from an email that has SBA in the domain name (the part after the @). They are requesting personal information (like your social security number, for instance) in order to proceed with the processing of your loan. 

What you should know: Look out for phishing attacks/scams utilizing the SBA logo. These may be attempts to obtain your personally identifiable information (PII), to obtain personal banking access, or to install ransomware/malware on your computer.

If you are in the process of applying for an SBA loan and receive email correspondence asking for PII, ensure that the referenced application number is consistent with the actual application number.

Any email communication from SBA will come from accounts ending with sba.gov. The presence of an SBA logo on a webpage does not guarantee the information is accurate or endorsed by SBA. Please cross-reference any information you receive with information available at www.sba.gov.

What You Can Do

If you suspect that you are being contacted or solicited by a person or company with malicious intent, contact the SBA Office of the Inspector General by calling 800-767-0385 or submit a complaint on their website here.

How We Can Help

While we cannot give you specific advice regarding your application, The Incorporators is ready to assist you with any document retrieval you may need in your application and approval process.

We have found that some clients have needed a Certificate of Good Standing, a copy of their Articles of Incorporation, or have discovered that their charter lapsed and a revival is needed. We are open and ready to assist you. Give us a call at 800-223-3928 if there is anything we can help you with.