The Better Business Bureau (BBB), Arlington, Va., warns that an increasing number of small business owners—in search of alternative sources of funding—have fallen victim to fraudulent online loan offers.

Examples include:
* Mediations, LLC. It charged up-front fees—payable by wire transfer or cashiers check only—for construction loans that never materialized.
* National Small Business Alliance. It offered preapproval for credit lines of $8,000 for a one-time membership fee of $99 to $149. However, the so-called credit line comprised only coupons, discounts, and other questionable offers and credit terms. If you signed up, you would continue to have fees deducted from your financial account without your permission and not receive refund money as promised.
* Capital Funding Programs. This and other fraudulent companies promised government grant money to small business owners who had been burned by online offers. Professional-looking Web sites lured unsuspecting victims into yet another scam, requiring payment of several hundred dollars via wire or money order. Victims never heard from the phony company again.

The BBB advises small business owners to check out government grant programs at grants.gov. Visit bbb.org to check the reputation of unfamiliar companies before you do business with them.

Published July 30, 2008