Small businesses often are short on cash or credit and in need of funding. A California company is offering local businesses financing through the mail by sending them what looks like a credit card.
The Ideal Weigh is a weight loss company in Sioux Falls. In the five years they've been in business, the owners have gotten all kinds of credit offers.
"We get credit card offers--American Express, business cards, things like that. But usually it's just a paper envelope--you open it up and shred it and away you go. This one was a little different in that there was a physical credit card in the envelope," Owner Alex Halbach said.
It's not a credit card, but rather a pre-qualified offer of up to $150,000 in loans.
"What seemed really strange to me was that this was actually a physical card. It talked about activating it. If it wasn't really a card, why would I need to activate it? It smelled fishy to me," Halbach said.
I called the number for National Funding and asked what the fees and interest rates for the loan would be and was told there were 20 different programs and that couldn't be determined until I had been through the application process. I asked why it looked like a credit card. The National Funding representative told me that was a marketing tactic. That it was not a credit card, there was no magnetic strip and it was a program card, more like an "AAA" card.
It's that kind of marketing that is raising red flags with consumers. While National Funding uses the Better Business Bureau logo on its advertising material and it is in good standing with the BBB, there are 25 consumer complaints filed against the loan company.
"The complaints appear to be it looks like credit card funding and it's not. And they haven't looked for any credit and they're pulling a credit report on a company and they didn't want a credit report pulled," Jessie Schmidt with the Better Business Bureau said.
The recent mailings to area businesses are a good reminder to thoroughly investigate any company offering you cash.
"People use them, just like payday loans and things of that nature, but you have to be careful with what you start doing," Halbach said.
If you do get pre-qualified offers in the mail that you don't want, be sure to shred all the documents, including any plastic cards, to prevent them from falling in the wrong hands.
You can take advantage of the Better Business Bureau's annual shred event this Saturday.