Randy Hutchinson, President and CEO of the Better Business Bureau of the Mid-South, advises small-business owners about a recent FTC action against a company that raised over $37 million through deceptive lending practices. According to the FTC, business owners searching online for funding were often directed to a website called Seek Capital, which promoted quick, easy access to loans and business lines of credit.
After the owners signed contracts, the FTC reported that Seek Capital began submitting applications for multiple credit cards, typically in the owners' names rather than the business's, without the owners' knowledge or consent. The company charged a 10 percent fee on the total credit obtained, which, for some owners, amounted to thousands of dollars. Many of these owners only discovered the credit cards after the accounts had already been opened.
Hutchinson urges small-business owners to start locally when exploring financing options. Community lenders and hometown institutions are often safer and more transparent. For those looking online for financing, he warns that the top results on Google are not always reliable, as they may include paid advertisements from companies that do not operate with integrity.
Before sharing sensitive financial information, Hutchinson suggests thoroughly evaluating any lender. This includes checking their Better Business Bureau (BBB) record, carefully reading all terms, and seeking advice from a trusted expert if you’re unfamiliar with loan agreements.
Consumers can research companies, file complaints, or read reviews at BBB.org or by calling 1-800-222-8754.