Red flags when choosing a funding company
Red flags when choosing a business funding company: how to spot a scam, what a trustworthy funder looks like, and the questions that protect your business.
The biggest red flags when choosing a funding company are fees demanded before you are approved, promises of guaranteed approval, pressure to sign before you understand the terms, and a company you cannot verify. A trustworthy funder has a real address, a track record, protects your data and explains every term in plain language before you sign.
Why this matters
When cash is tight and a deadline is close, it is easy to say yes to the first company that calls back. Most funding companies are legitimate. Some are not, and the bad ones count on owners being in a hurry. A few minutes of checking protects your business, your bank account and your personal information.
Red flags to watch for
Red flag 1: Upfront fees before approval
Be very careful with any company that asks you to pay a fee to “process,” “guarantee” or “secure” funding before you have an approval in writing. Any legitimate cost should show up in the offer itself, explained, before you sign.
Red flag 2: Guaranteed approval
No honest funder guarantees approval before looking at your business. A real review looks at your revenue, your bank deposits, your time in business and your credit. “Everyone is approved” usually means something else is going on.
Red flag 3: Pressure to sign right now
Speed is good. Pressure is not. A company that says the offer disappears in ten minutes, or discourages you from reading the agreement, is protecting itself, not you. Fast funding and taking time to understand your offer go together.
Red flag 4: Vague answers about cost
If you ask what you will pay back in total and get a runaround, walk away. A trustworthy funder tells you the total payback, the fees, the payment schedule and the term, in writing, before you accept. To see how different amounts and terms look before you talk to anyone, try the funding calculator.
Red flag 5: No verifiable address or history
Look for a real office address, a company history you can check and a phone number that reaches a person. Be cautious if the only contact is a cell number or a free email address, or the company name changes from call to call.
Red flag 6: Requests for your banking passwords
You should never need to give anyone your online banking username and password. A legitimate funder asks for your bank statements through a secure upload.
Red flag 7: Careless handling of your information
Ask how the company stores your information and whether it shares or sells it. If you get no clear answer, or you start getting calls from companies you never contacted, take that seriously.
Red flag 8: Offers that make no sense for your business
A company that offers far more than your revenue can support, or pushes a product that does not match what you need, is not looking out for you. A good specialist sizes the funding to your cash flow and your purpose.
A quick checklist before you sign
Before you accept any offer, confirm:
- You have the offer in writing, with total payback, fees, payments and term.
- No one asked for money before approval.
- You can verify the company’s address and history.
- You uploaded statements securely and never shared banking passwords.
- Someone explained every term and answered your questions.
If you plan to sign a large or complex agreement, have your accountant or attorney review it.
What a trustworthy funding company looks like
Here is how Royal Funding Group measures up to that list.
Real offices and a real history. RFG was founded in 2012. Our headquarters is at 180 Maiden Lane in New York, and we have an office in Miami. You can learn more about us.
A track record. More than $6 billion in capital deployed, more than 25,000 businesses served, and more than 100 funding specialists serving businesses in all 50 states.
Your data is handled with care. We run on proprietary in-house software, share your details only with the funding partners reviewing your deal and never sell your data. Statements come in through a secure link.
Every term explained. One application gives you access to multiple options through our network of funding partners. Your specialist lays them side by side and explains the total payback, fees, payment schedule and term on each one, and answers every question before you sign.
Honest about who we fund. We fund U.S. businesses with 12 or more months in business, for business purposes only. We do not fund startups or pre-revenue businesses at this time. If we are not the right fit, your specialist tells you straight.
Fast, without the pressure. The application takes two minutes, a specialist calls you the same day, approvals come in hours and funding goes out the same day. You still get the time to read and understand your offer.
If you want to see how a straightforward process feels, you can apply in two minutes with no documents to start.
Work with a funder you can check out
You should be able to verify who you are dealing with before you share a single statement. With RFG you get a company with real offices, a long track record, a strict no-selling policy on your data and a specialist who explains every term. Apply in two minutes or call (929) 506-8133, Monday to Friday, 9 AM to 6 PM ET. Our FAQ answers the most common questions first.
