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Business Debt Relief Scams and Complaints

Business Debt Relief Scams and Complaints

Debt relief scams targeting small business owners are, unfortunately, very common these days. As a business owner struggling with debt, you may be desperate for solutions. And that desperation makes you vulnerable to predatory schemes promising fast debt relief that seem too good to be true — because they usually are.

This article will discuss the most common small business debt relief scams, how to recognize them, where to report them, and legitimate alternatives for getting your business finances back on track. We’ll be empathetic and straightforward, with the goal of protecting you from deception while also acknowledging the very real stress of business debt.

Common Business Debt Relief Scams

Here are some typical scams to watch out for:

Upfront Fees for Little or No Services

One huge red flag is any company asking for large upfront or monthly fees before doing anything to actually help relieve your debt. They promise the world — settling debts for pennies on the dollar, making creditors immediately stop collections, etc. But it’s all lies to get into your wallet.

Once you pay up, they provide little if any real debt relief while continuing to collect fees. Dodgy companies like this steal millions from struggling small business owners each year.

Credit Repair Organization Scams

There are legitimate credit repair companies out there. But many scammers falsely claim they can remove negative marks from your business credit report, even when that information is fully accurate and legal.

They usually ask you to pay an advance fee, then fail to deliver promised results. And some will recommend you start a “new” business identity — which is illegal credit fraud.

Fake Debt Relief Law Firms

Some scammers pretend to be law firms offering expert debt relief services like bankruptcy filing or debt settlement negotiations. But in reality, there are no legitimate lawyers involved. These outfits exploit your hopes of getting legal help.

Once you pay their hefty retainer fees, they provide little if any real legal assistance. They may have slick websites and official-looking documents, but it’s all smoke and mirrors covering up their fraud.

Advance Fee Loan Scams

When banks turn down your business for a loan, scammers are ready to pretend they will lend to you … for an upfront fee, which they pocket while never actually providing the promised funds.

These advance fee loan scams keep growing more sophisticated, using fake websites, documents, and communication methods to appear legit. But their supposed “approvals” vanish as soon as you pay the advance “processing” fees.

Warning Signs of a Business Debt Relief Scam

While scammers are masters of disguise, there are still signs to watch for:

  • Claims that sound too good to be true usually are — be very wary of promises to make debt instantly disappear or cut it by extreme amounts.
  • High-pressure sales tactics trying to get you to act fast before closely reviewing their offer. Scammers want your money before you detect the fraud.
  • Requests for large upfront or monthly fees before providing any actual services.
  • Vague language about their company, location, licensure, etc. Legitimate firms are transparent.
  • Lack of required state licenses for industries like law firms, credit counseling agencies, and lenders. Check license databases.
  • Poor grammar, spelling mistakes, inconsistent company names — signs of fly-by-night scammers.
  • No physical office location, just a website and phone number — easier for scammers to vanish and restart somewhere else.
  • Unprofessional communication riddled with errors — scam outfits often cut corners.
  • Too-good-to-be-true claims they can make creditors immediately stop collections or remove accurate negative information from your credit report.
  • Requests for sensitive information like bank account numbers before fully vetting their services.
  • Recommendations for illegal practices like creating a fake business identity.
  • Refusal to provide detailed, written services contracts before requiring payment.

Where to Report Business Debt Relief Scams

If you encounter a business debt relief scam, report it immediately to shut the crooks down before they steal from other entrepreneurs. Here are good places to file complaints:

  • Federal Trade Commission (FTC): Report scams involving credit repair, debt relief, and advance fee loans online at or by calling 1-877-FTC-HELP.
  • Consumer Financial Protection Bureau (CFPB): Report credit repair/debt relief scams online at or by calling 1-855-411-CFPB.
  • State Attorney General: Find your state AG office here to report scams violating local consumer laws.
  • Better Business Bureau (BBB): File a scam report with your local BBB office to warn other entrepreneurs, either online or by phone.
  • Local Law Enforcement: Contact your local police department’s non-emergency number about suspected frauds in your area.
  • Small Business Administration (SBA): Report scam attempts against your small business by calling SBA’s Office of Inspector General at 1-800-767-0385.

The more victims who speak up, the sooner authorities can build cases against shady debt relief operators and protect other business owners from their financial and emotional devastation.

Legitimate Alternatives for Business Debt Relief

While scams offering fast debt elimination sound appealing when you feel overwhelmed by what you owe, understand that legal options providing lasting (not quick-fix) relief take time and effort. But the investment is worth it.

Here are legitimate ways to regain control of your business finances:

Budgeting & Cost-Cutting

Getting back to basics — tracking all cash flow in/out, reducing unnecessary expenses, negotiating rates with vendors/landlords, etc. — can significantly lower monthly deficits. Tough but effective medicine.

Working with Creditors

Good-faith negotiations with creditors to lower/defer payments shows responsibility and may convince them to offer concessions rather than lose you as a customer. Document all communication.

Debt Management Plans

Reputable credit counseling agencies can negotiate reduced interest rates, waived fees, consolidated payments, etc. from your creditors. But avoid places charging hefty upfront fees.

Debt Consolidation Loans

Banks/credit unions may approve a loan letting you pay off debts at lower interest than credit cards, reducing overall monthly payments through a single loan. But watch for very high APR debt consolidation loans from predatory lenders.

SBA Disaster Loans

Small businesses negatively impacted by declared disasters — which now includes COVID-19 — can apply for low-interest SBA recovery loans up to $2 million to pay debts/operating expenses.


As a last resort if no other options satisfy creditors, business bankruptcy with help from a legitimate attorney can eliminate eligible debt entirely through liquidation or give you time to reorganize finances through Chapter 11.

The above are all legal, ethical options for tackling business debt under the guidance of reputable professionals. They require diligence from you rather than empty promises of overnight debt relief. But enduring some short-term pain leads to long-term gain and a healthier bottom line.

Don’t Let Desperation Make You Prey

Struggling with business debt is emotionally draining. And owing money you can’t currently repay hurts your pride. So when scammers dangle quick fixes in your face, it’s tempting to leap without looking.

But fight that urge! Scam victims only sink deeper financially and emotionally. Whereas taking a breath, thinking clearly, and exploring legitimate options gives you power over debt rather than giving scammers power over you.

Here are wise steps to avoid being scammed:

  • Educate yourself on common predatory tactics so you can recognize them immediately. Forewarned is forearmed.
  • Research any company thoroughly before paying them or sharing personal information, including checking their industry license status with your state/federal regulators.
  • Ask lots of questions and review contracts closely before signing anything. Make sure you completely understand each detail of what a company promises to deliver, on what timeline, for exactly what fees.
  • Talk to your lawyer or Financial advisor for guidance to ensure any debt relief agreements meet your needs, are feasible for your situation, and comply with laws protecting consumers.
  • Start with free debt counseling sessions before committing to any paid services. Many legitimate non-profits provide free budget, credit, and debt advice, giving you guidance to weigh options.
  • Trust your gut instincts. If an offer gives you a bad vibe or seems questionable, avoid it and keep seeking alternatives. Don’t overrule your common sense.

Yes, rejecting scams means debt relief takes longer. But protecting yourself from victimization lets you focus time/money on ethical methods that ultimately resolve debt for good.

We’re in Your Corner!

Struggling small business owners deserve better than to have their hopes exploited and bank accounts drained by unethical debt relief scammers. We hope this article helps you avoid their traps. And remember — you have an entire community of peers and ethical professionals standing beside you, ready help lighten your debt burden the proper way.

Delancey Street is here for you

Our team is available always to help you. Regardless of whether you need advice, or just want to run a scenario by us. We take pride in the fact our team loves working with our clients - and truly cares about their financial and mental wellbeing.

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