Grant and Loan Scams Target Small Business Owners Affected by Covid-19

  • May 11, 2020

While there are many legitimate grant and loan programs available to assist small businesses, the Small Business Administration (SBA) and Better Business Bureau (BBB) are warning business owners to guard against fraudulent funding opportunities. Criminals are using social media, text, and phone calls to lure business owners into providing sensitive information under the pretense of providing a grant or a loan. Here is how the scam works and how you can spot a grant scam and stay safe.

The Con

Messages are being sent to business owners through several channels informing them that they are eligible for a grant. These messages take the form of phone calls, emails, texts, and social media messages. The sources appear legitimate. The caller ID or email address will say “SBA”. The representative instructs the business owner to fill out a simple form with personal information including both contact information and sensitive banking information. Then the business owners are instructed to pay a processing fee, usually in the amount of several thousand dollars. Business owners desperate for assistance take the bait only to find out they have been victim to a grant scam.

Social Media

On social media, criminals take this a step further by using a compromised Facebook account to post content or send messages to business owners. After the SBA imposter contacts a target through phone or message, a Facebook friend will message the target or post content about the fake grant telling the target how great it is and encouraging them to apply.

Red Flags

It is difficult to think clearly in times of extreme stress, and many business owners are currently facing their most stressful fiscal year to date. However, there are a few things about this scam that should be an immediate clue that something is not right.

  • The government does not have a Facebook account. No one from any legitimate government or state organization will ever reach out to people through social media. The SBA is not your Facebook friend or your Instagram follower. If anyone reaches out to you on these platforms claiming to be these entities they definitely have nefarious intentions for doing so.
  • Processing fees do not exist for grants or emergency loans. Why would the government charge thousands of dollars to “help” a company that is clearly already struggling? It does not add up. If anyone offers a Covid-19 related grant and claims you must pay to have it processed, they are attempting to make you the victim of a grant scam.
  • Before you offer anyone any personal information research the opportunity online. If you can not find any legitimate references to the opportunity, it is probably fake.

Less Obvious But Still Helpful Tricks To Avoid A Grant Scam

  • Look for websites and emails that end in .gov, .ca, or .org.
  • Legitimate organizations may not have .com for URLs or emails.
  • Never click on links embedded in emails. Go directly to confirmed government websites to enter any information.
  • Contact the BBB to report any suspicious activity

Staying safe out there means more than social distancing. It also means staying aware and informed and avoiding scenarios that could put you at financial risk.

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