Any bankers here, is this right?

lendaddy · 09-30-2008, 10:19 AM

We had a bank offer us a working capital loan for our company. We filled out the application and they contacted us saying that everything was nearly set and they needed a two payment deposit and a small fee. We sent them that and they said it would be 24-48 hours for funding.

That was over a week ago now and they are now claiming they can't fund it as arranged and are working on a second option. Given the banking situation I understand that.

But...is/was it ethical for them to have cashed my check without an agreement?

daepp · daepp's Garage

I am vrey sorry to say that this is at least the forth time I've heard this in last few weeks. It seems they take a deposit/origination fee, then blame the "market" for being unable to fund. Beware.

lendaddy · 09-30-2008, 10:31 AM

Quote:

Originally Posted by daepp

I am vrey sorry to say that this is at least the forth time I've heard this in last few weeks. It seems they take a deposit/origination fee, then blame the "market" for being unable to fund. Beware.

Ughh, meaning what? Is it a scam or are they just using it as a cashflow vehicle? Did those folks get a refund? Are there any banking regulations that prevent them from taking a deposit without a product?

kstar · 10:35 AM

Is the lender an actual bank or another type of lender?

edit: I ask because there are certain lenders who do have a profit center in up-front fees and a poor record actually funding loans.

lendaddy · 09-30-2008, 10:34 AM

Quote:

Originally Posted by kstar

Is the lender an actual bank or another type of lender?

They are not a brick and mortar bank, no. More of a business leasing/loan firm. They checked out legit in my research, admittedly rushed.

Anyone in Utah want to pull a John Walker?

daepp · daepp's Garage

No one has gotten a funding or their money back. The case I've followed the closest is a customer of mine who refuses to give up on the deal. He emails them daily (for weeks now) and they refuse to do anything. I believe theya re now no longer responding. I believe all of these cases involved out of state (out of CA - NY I think) lenders.

lendaddy · 09-30-2008, 10:36 AM

Quote:

Originally Posted by daepp

No one has gotten a funding or their money back. The case I've followed the closest is a customer of mine who refuses to give up on the deal. He emails them daily (for weeks now) and they refuse to do anything. I believe theya re now no longer responding. I believe all of these cases involved out of state (out of CA - NY I think) lenders.

Great, insult to injury.

I need a drink.

daepp · daepp's Garage

I could be wrong - I know nothing of your loan. I am sorry to be the bearer of bad news. Where was the lender located?

lendaddy · 09-30-2008, 10:39 AM

Quote:

Originally Posted by daepp

I could be wrong - I know nothing of your loan. I am sorry to be the bearer of bad news. Where was the lender located?

SLC Utah

Rick Lee · Rick Lee's Garage

Quote:

Originally Posted by lendaddy

SLC Utah

UT is the money fraud capital of the U.S. Let this one be a lesson, report it and consider it lost.

Shaun @ Tru6 · 09-30-2008, 10:55 AM

I was warned about this scam last week. Sorry.

dtw · 09-30-2008, 10:59 AM

Len, I hope this is not fraud. I know how tight cash has been for you the last few years. It doesn't smell right to me that they'd ask for an up-front deposit, but I admittedly have had little dealings in small business credit lines.

Do you have any attorneys you can turn loose on them?

Can you please post the name of the institution?

MRM · 09-30-2008, 11:09 AM

Len, I can think of no reason for someone to demand up front money in the manner you describe for a working capital loan. Never do business with someone you can't touch. I know you're in hardship conditions now, but don't do business with moneylenders who are not banks. Please contact your local university business department and sign up for one of their small business clinical programs where they put students to work on your business like they were real outside consultants. You need professional MBA-type outside management expertise to get you from here to there.

the · 09-30-2008, 11:17 AM

"business leasing" firms are, for the most part, fairly crooked. even when they somewhat perform, their contracts are usually a snakepit with all sorts of things put in there to screw you.

But this sounds like an all out scam.

Shaun @ Tru6 · 09-30-2008, 11:20 AM

go to your regular bank and ask them about the company, they may be able to give you more information. Our credit union warned me about this scam after they turned down my request for an increase in our line of credit. I didn't ask, but got the impression that this story is going through the banking community.

Christien · Christien's Garage

You say your research was "admittedly rushed" - just how much due diligence did you perform? Was there any indication that these guys were less than legit? How much are we talking about here that you sent them? What form did you send it in? Have you talked to your bank yet about reversing whatever payment?

lendaddy · 09-30-2008, 11:37 AM

Thanks guys,

I will update soon.

It's not a huge amount of money, but we had already been planning on the infusion. I made my bed.

lendaddy · 09-30-2008, 12:43 PM

Upon further research they are a legit company but I still fear/know they are screwing me over. On the phone the loan officer "reluctantly" asked me to confirm that I wanted to cancel the transaction and said he would get that ball rolling. I said "No, I want the loan to be funded as I've already made payments on it". I went back and re-read the boiler plate fine print of the agreement and found this:

"You agree to forfeit any deposits made in conjunction with this transaction if you fail to proceed with or cancel the transaction."

Slimy bastard.

dtw · 09-30-2008, 12:56 PM

Quote:

Originally Posted by lendaddy

Upon further research they are a legit company but I still fear/know they are screwing me over. On the phone the loan officer "reluctantly" asked me to confirm that I wanted to cancel the transaction and said he would get that ball rolling. I said "No, I want the loan to be funded as I've already made payments on it". I went back and re-read the boiler plate fine print of the agreement and found this:

"You agree to forfeit any deposits made in conjunction with this transaction if you fail to proceed with or cancel the transaction."

Slimy bastard.

Ultimately, calling them out on non-performance will not constitute failure to proceed/cancellation on your part. The UCC says it takes two to tango! That contract language, however slimy, will not save them if they don't fund. Time to ask them when you can expect the loan to be funded, or if you should be letting loose your rabid pack of attorneys.

Please post their names!

lendaddy · 09-30-2008, 12:56 PM

I just got off the phone with the managing partner at this firm. He was much different than the loan officer and was very agreeable. He admitted that they do not have access to funds as they did even a couple days ago, that they cannot honor their end and would refund our deposit without strings attached.

We shall see.