Beware of Bogus Lenders Posing as Private Investors

 Have you ever had a hard loan to fund and you were forced to go and look for funding? It’s a jungle out there. Because the world of commercial financing is unregulated by ‘Big Brother,’ there are a lot of criminals in the space of private money lending. You will find both brokers who collect upfront fees from borrowers without providing a loan. You will find bogus lenders hiding behind decent brokers too; these lenders have no intention to lend and are also known to charge upfront fees and then never deliver on funding.

 

Here are some red flags to look out for to help spot bogus lenders posing as private investors:

1. Be wary when your broker or so-called lender refers to the lender as the “investor” or “group of investors.”
2. If you have a hard to finance deal and a lender or broker gives you a term sheet or Letter of Intent with almost no documentation.
3. Large upfront fees. Although legitimate lenders also charge upfront fee, pay attention to #2 when a lender slaps you with an upfront fee. Also, do your homework online and see if you can find bad reviews. A trusted lender may have 1 or 2 disgruntled clients but this is a red flag.

 

Remember, if it sounds too good to be true, it probably is. Do your homework and don’t allow yourself to get caught up in a fraudulent lending scam. If you want to read more about popular lending scams out there, check out a blog post I wrote on this topic here, good info to know: http://privatemoneyutah.com/how-to-avoid-lending-scams/