How the “Advance Fee” Business Capital Loan Scam Works

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Qualifications: In business for at least 9 months with at least $120K in sales over the past 9-12 months

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Each day across the country, hundreds of people get deceived by an “advance fee” business capital loan scam. Here’s how it basically works:

Victims come across an ad (either online or in a newspaper or magazine), which promises something along the lines of “ultra easy business capital loans with guaranteed approval for people with bad credit”.

Notably, the ad will only have a phone number, and won’t have an address – since the scammers obviously don’t want to get any visitors! Furthermore, in the unlikely event that there is an address, then a quick Google search usually reveals that it’s bogus (a mall, an empty lot, etc.).

After calling the number – which is usually toll-free – victims talk to a so-called “business capital loan dealer” (there are various titles). This individual asks victims for their personal and financial information.

Either on-the-spot or later the same day (usually within an hour), victims are told there is a high likelihood that they will be approved for a loan in the next few days.

To move the process forward, the business capital loan dealer demands an administrative processing fee that is usually around $200, but sometimes higher. This fee must be paid by money order or cashier’s check, and sent via overnight courier. Obviously, EACH of these demands are red flags, but victims are so relieved that they might be getting a loan, that they look past the warning signs. As they say, hindsight is 20/20.

Once the business capital loan dealer receives the money, he or she contacts the victim and says that their application has been passed along to potential lender.

Shortly thereafter – usually a day or two – victims receive a call from a so-called lender, who demands more money to run a credit check, plus more processing fees.

Notably, the lender does not reveal the name of their company – or if they do, it’s bogus. Even though some victims start to worry here if they are being conned, the fact that they have already invested time – and money – in the process prevents many of them from calling a time out, and possibly, pulling up stakes and cutting their losses. This is human nature. Psychologists call it “a desire for congruence” — the scammers know this and count on it.

As you might expect, even after paying the additional fees to the lender, the victim’s application for a business capital loan is denied. When victims protest this and point out that the only reason they started this whole process in the first place was because an ad guaranteed them a business capital loan, the lender simply ends the conversation.

While victims can contact the police and file a complaint, the lack of an agreement or other “hard evidence” makes criminal prosecution difficult. Trying to haul the scammers into civil court (small claims or other) is also a longshot, again because information is sparse and so is evidence. And frankly, many people are just too humiliated to file a complaint in the first place.

And if you may think that this is a small time operation: think again! The website Crimes of Persuasion noted that one scam just like the one described above defrauded more than 5,000 victims of a combined 1.1 million in only 9 months!

Applying for a REAL Business Capital Loan

At Mulligan Funding, we provide customers with access to REAL business capital loans – because we are a real company! What’s more, we are NOT loan brokers. We provide funding for all of our loans with our own cash, which simplifies, streamlines and speeds up the process for our customers. At the same time, it protects our customers’ confidentiality, privacy and credit rating (i.e. we don’t “shop” our customers’ loan application around the country and expose them to repeated credit checks by prospective lenders — which drives up their score).

Call Mulligan Funding at 855-326-3564 to discuss your financing options today!

The information shared is intended to be used for informational purposes only and you should independently research and verify.

Note: Prior to January 23, 2020, Mulligan Funding operated solely as a direct lender, originating all of its own loans and Merchant Cash Advance contracts. From that date onwards, the majority of funding offered by Mulligan Funding will be by Loans originated by FinWise Bank, a Utah-chartered Bank, pursuant to a Loan Program conducted jointly by Mulligan Funding and FinWise Bank.