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SBA warns of fraud attempts on loans

The U.S. Small Business Administration (SBA) is warning small businesses to use caution if they are contactedsbalogosmall by firms offering to help them apply for funds available through SBA programs.

SBA and SBA’s Office of the Inspector General (SBA OIG) have received several complaints from small businesses about abusive marketing practices, scams, and exorbitant fees charged by firms offering to help them obtain a loan, grant, or other federal funds, from SBA. 

Some of these complaints include:

  • Firms charging small businesses high fees to provide assistance applying to SBA funding programs.  Some firms allegedly guaranteed that the small business would obtain SBA funding if they paid the fee.  SBA does not endorse or give preference to specific private companies or their clients.
  • Firms charging small businesses for services never requested after the small business gave bank account and routing information to a caller claiming to be a firm offering assistance. SBA recommends that small businesses never provide social security numbers, bank account information, or credit card numbers to anyone; and, never over the telephone.
  • Firms alleging that a small business would be issued a “forfeiture letter” that would make the small business ineligible for any SBA funding for three years if the small business refused to use the firm’s services.

When electing to use a third party to apply for SBA funding programs, SBA advises:

  • Get free assistance from SBA. You call one of SBA’s 68 District Offices or go to SBA’s Web site (www.sba.gov). You can also get assistance from Small Business Development Centers, Women’s Business Centers, Veterans Business Outreach Centers and SCORE Chapters, either free or for a reasonable fee. Location and contact information for the centers can be found on SBA’s Web site.
  • Ask for references and confer with trusted colleagues and institutions, such as the Better Business Bureau, when selecting service providers. 
  • Establish and document what you are being charged; when you will be charged; what you must do; and what services you will receive. 

SBA’s Office of the Inspector General will investigate and respond to all complaints.  SBA encourages anyone with knowledge of a misrepresentation regarding SBA Business Loan Programs, or any other SBA program, to contact SBA OIG by calling the OIG Hotline toll-free at (800) 767-0385, or submitting an online report at the SBA OIG Web page (www.sba.gov/ig), and click the link for “Report Fraud Waste or Abuse.” 

If you have a question regarding an SBA loan or any SBA program, you may contact your local SBA District Office, the SBA Answer Desk at 800-U-ASK-SBA (1-800-827-5722) or e-mail answerdesk@sba.gov.


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