17 | December 2017

BEWARE: SBA Finance Assistance Scams

April 19, 2010

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

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

SBA and SBA's Office of the Inspector General 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.

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, small businesses should also bear in mind:

  • Small businesses can get free assistance in person or by calling one of the administration's district offices and from information on SBA's Web site. They can also get assistance from Small Business Development Centers (SBDC), 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.

  • Small businesses should ask for references and confer with trusted colleagues and institutions, such as the Better Business Bureau, when selecting service providers.

  • Small businesses should clearly establish and document:  1) What they are being charged; 2) When they will be charged; 3) What they must do; and 4) What services they will receive.

The administration's inspector general will investigate and respond to all complaints.  Anyone with knowledge of a misrepresentation regarding SBA Business Loan Programs, or any other SBA program, is encouraged to call 415-744-6820. You also may submit a written fraud report and mail it to SBA, 455 Market St., Suite 600, San Francisco, CA  94105, ATTN:  Lender Relations.

Sincerely,
Alameda County SBDC

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