By Katharine Carlon

With fear in the air and an information vacuum only feeding it, fraudsters are on a tear targeting businesses desperate for good news on their Small Business Administration loan and grant applications.

“We are starting to get inundated with a lot of scams and fraud schemes,” Jayne Armstrong, district director of the SBA’s Iowa District Office told the CBJ. “The vultures are out and it’s awful. People are calling and [purporting] to be from the SBA, asking for Social Security information, asking for tax information.”

The situation is so bad, the Office of Inspector General issued a warning Tuesday alerting business to ongoing grant fraud, loan fraud and phishing attempts just as the business community faces “unprecedented times.”

“Fraudsters have already begun targeting small business owners during these economically difficult times,” the agency wrote, adding business owners should be on the lookout. Minnesota small business owners have reported receiving fraudulent emails bearing the SBA’s official logo, notifying them their emergency small loan applications had
been received. The phishing emails directed them to complete and return an IRS form with tax information, however some recipients noticed the application numbers didn’t match up and the email originated from a private account.

In Kentucky, scammers contacted small businesses falsely claiming they needed to file for the SBA’s Economic Injury Disaster Loan program immediately and demanding a nonexistent fee to apply,

“People need to be very conscientious and aware there are scams out there,” Ms. Armstrong said. “If anybody thinks something might be a scam, we are asking them to please alert the SBA.” The Inspector General released the following guidelines to help businesses protect themselves from potential scams and fraud:

Grants: The SBA does not initiate contact on either 7a or disaster loans or grants. If you are contacted by someone claiming to be the SBA, suspect fraud.
Loans: If you are contacted by someone promising to get approval of an SBA loan, but requiring any payment up front or offering a high interest bridge loan in the interim, suspect fraud.
Loan fees: The SBA limits the fees a broker can charge a borrower to 3% for loans $50,000 or less and 2% for loans of $50,000 to $1 million, with an additional 0.25% on amounts over $1 million. Any attempt to charge fees higher than these is inappropriate. CBJ