Are Online Business Loans Safe?

When you own a business, it’s crucial to be streetwise about online security, ensuring that you’re taking out a loan with a dependable provider and not placing yourself at risk.

Read our top tips for detecting online fraud, and learn to identify legitimate lenders.

Online business loans provide SMEs with quick and secure injections of capital. This can help you get off the ground when starting out, or flourish through additional investment.


1. Do your homework

To begin with, it’s worth researching any prospective lender thoroughly in advance.

Google is your friend. Search for the lender’s name and look to see whether there’s feedback from previous borrowers; it’s is a useful indicator of authenticity and reliability.

No news isn’t necessarily good news. A search engines revealing minimal results suggests a site is very new, and could be fraudulent. Be cautious if this happens.

Next, see whether the lender is operating legally by checking their details with the government’s Companies House. And double-check that their company number matches with the number on the lender’s website. If a company doesn’t appear in Companies House, they’ll likely lack the proper legal registration to be operating. Try it out with Esme Loans – you’ll see the details on Companies House match the details right at the bottom of this page.


2. Keep your details safe

When generating quotes, all loan application forms require details from the borrower. These are often highly sensitive, from contact information to revenue figures.

The majority of lenders use sophisticated encryption to protect data, but checking for yourself if a site is secure is simple, when you know what you’re looking for.

Firstly, look at the URL. A secure website will have ‘https’ before the website address and a closed padlock alongside it.

This shows that the lender’s website is protected and encrypted. A website without these may be unsecure and placing your information at risk.

Secondly, look for the lender’s privacy policy, which is lawfully required to state how your data is both collected and protected. If you can’t find a policy, or if it contains information you’re unsure about, it may be best to source your finance elsewhere.


3. Never make payment before receiving your loan

A key indicator that you might be working with an unlawful lender is if you’re asked to provide payment upfront.

It’s highly uncommon for any loan application to require funds from the borrower in advance. Instead, you should only expect to pay the lender after the business loan has been received.

If you’re asked to provide money before you’ve borrowed any, ensure that there’s a clear legal reason to do so (and that the lender is a credible provider).


4. A guaranteed business loan is a guaranteed scam

Fraudsters often bait borrowers by offering guaranteed approval for applications. It’s a way for them to make loans seem even more attractive, skipping out paperwork and luring prospective borrowers into taking action prematurely.

A legitimate lender will never guarantee a loan before reviewing an application. Only through reviewing can a lender verify that a borrower is able to repay their loan in a timely manner.

What should you do if you spot an unsafe loan?

Report any dodgy lenders to the Action Fraud Police. They’ll take all the necessary steps, and your fellow SMEs will be more than grateful for your help!


Esme’s ‘Final Thought’

Though business loans are an excellent way of growing your business, it’s crucial to be diligent online. Ensure you only borrow from reputable and verified lenders, and grow your business in a safe and dependable way.

Here at Esme, we offer a range of online business loans backed by NatWest. Find out more about our services here, or apply for a business loan today.

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David Cliff - Founder of Senior Dating Agency

David Cliff - Founder of Senior Dating Agency
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David borrowed over £37,500 to keep his online marketing going during cash flow squeezes.

“I remember it being unbelievably simple and once I’d accepted the offer the funds were in the account within a couple of hours. The reason I went with Esme was the simplicity of arranging the loan.”

Joanna Hunter - MD of Piglets Pantry

Joanna Hunter - MD of Piglets Pantry
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Joanna borrowed £25,000 to buy more equipment and grow her business.

“The process couldn’t have been simpler really, from the initial recommendation to conclusion of having the money available to spend, it all happened within 48 hours, which is quite incredible.”

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