By: Sierra Stieber
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How to Stay Safe When Applying for Business Financing Online
The majority of SMBs now apply for financing online. It’s easier and much more convenient than joining the queue at lenders’ facilities.
However, applying for business financing online also come with one major risk – cyber-crime. The Internet is prime “feeding grounds” for criminals waiting to pounce on your personal and financial information. Here are five security tips to help you avoid these risks when applying for financing online.
Business financing documents you’ll need
Typically, lenders want to see three years of business tax returns and two months of business bank statements, plus three years of personal tax returns and two months of personal bank statements. You’ll also need a current balance sheet, a profit and loss statement, and an accounts receivable aging report. Gather all these documents ahead of time and have them in a secure, central place.
Share the documents on a need-to-know basis
When applying for financing, wait for the lender to ask for information and only provide what has been requested. Don’t just send all the documents before you’re even asked to provide them. Also, it’s best not to share your phone number and other personal information such as bank numbers unless the lender requests so. This doesn’t mean that you should try to hide information. You must always be honest. Just wait until you’re asked.
Know your credit scores so you don’t have to give out your SSN
Your credit score is a critical element in the traditional bank loan application process. It is one of the main items financial institutions use to decide whether or not to lend you money and at what rates. Therefore, you need both your personal and business credit scores. You can get both by checking with Experian, Equifax, or TransUnion. If you can’t provide the two, the lender might ask for your social security number (SSN) so they can pull down your credit report/score on their own.
Beware of obvious signs of scam when searching for a financing partner
Finally, some scams are rather obvious. An example is a supposed lender asking for scanned copies of your credit card or even for your account number at very early stages. Or, some scammers will call you to ask for this information. Or, they could send suspicious emails, possibly to help them hack into your computer or phone. Be wary of such activities. The SMB and most banks will never call or send an email to ask for your account number.
To avoid the risks commonly associated with online bank financing applications, you might want to consider accounts receivable factoring. Receivable factoring approval is based on the credit-worthiness of your customers and therefore doesn’t require an invasive and potentially risky audit of your personal or business records. The process also speeds up the approval process so in most cases funding occurs within 24 hours. Click here to learn more.