Late last week, the president signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a $2 trillion stimulus package aimed at shoring up individuals and businesses during this unprecedented coronavirus crisis. Cue the scammers.
Specifically, security experts say small-business owners and sole proprietors accessing the Paycheck Protection Program–which offers to allocate $350 billion in loans backed by the U.S. Small Business Administration–are prime targets. “We’re talking $10 billion to $20 billion of fraud from this SBA program,” estimates Hicham Oudghiri, co-founder and CEO of Enigma, a small-business-focused data analytics and fraud detection company. While banks typically report general fraud rates of around half a percent, Oudghiri notes that that number will likely climb, as interest in the PPP loans–which are 100 percent guaranteed by the SBA and come with minimal credit checks and no fees–is expected to soar.
“Banks themselves may be ill-equipped to verify these companies and understaffed from a process perspective,” adds Oudghiri.
But there are steps you can take to try to prevent becoming a target. Here are four things to avoid when seeking a new SBA loan:
1. Don’t reveal personal financial information.
If you receive any calls, emails, or other communications claiming to be from the Treasury Department or the SBA offering you grants or stimulus payments in exchange for personal financial information, do not respond. And…
