Opinions expressed by BIZ Experiences contributors are their own.
If you're trying to get a small-business loan and someoneasks you for upfront fees, stop! You are about to be scammed, saysHarold Lacy of The Money Institute, a Golden, Colorado, companythat specializes in helping young companies understand businessfinancing.
"Scam artists have different ways of asking formoney," Lacy explains. "They might say `Our investorsneed a feasibility study' and charge you $500 or$1,000--something small to get you into the loop. Then they comeback saying the investors need this and that--and charge you forall of it."
Lacy says scam artists often surround the money withinternational mystique by claiming the investors are in a foreigncountry in chaos and are trying to get their cash out of thecountry. Look out for:
- a request for good-faith deposits to demonstrate to mysteriousforeign investors that you are serious about getting the loan.
- an ever-changing Caribbean area code, where you are charged foreach minute on the line.
- offsetting deposits, where the scam artist takes out alegitimate loan from a small bank and makes payments on it. He orshe markets this money as small-business loans, and when you callthe bank to investigate, everything sounds legitimate. Scammersthen ask for good-faith deposits or money for a feasibility study,but the loan is never made.
Whether scam artists call themselves business brokers, capitalinvestors or investment bankers, Lacy says, "your firstwarning should be when you have to deal with a representative. Youwant to talk to the people making the decision."
To protect yourself, check with the Better Business Bureau, thestate and local attorney general, and the Federal Trade Commissionto see if there are complaints against the business or theindividuals operating it. Also request references; legitimatebusinesses are happy to share their success stories.
Stock Around The Clock
Small-business owners who know exactly what and how much stockthey want to trade can take advantage of eBroker, a 24-hourInternet-only brokerage service that lets you trade when it'sconvenient for you.
Using a personal identification number, users can check stockprices and place orders on Nasdaq and all U.S. stock exchanges attheir own pace. Orders placed during nonmarket hours are executedthe next market session.
The service is geared toward active traders; to open an account,you need at least $10,000 in cash or securities from which to makeinvestments. Each trade costs $12. Time-delayed quotes are providedfree; 24-hour real-time quotes are available for $30 per month.
For more information, log on to the company's Web site at(http://www.ebroker.com) ore-mail info@ebroker.com.
Keep It Simple
Looking for a simple way to offer your employees a retirementplan? Consider the new Savings Incentive Match Plan for Employees(SIMPLE-IRA).
Approved by Congress last August, the SIMPLE-IRA is available tosmall businesses with 100 or fewer employees. For a low-cost andflexible retirement plan, try a turnkey SIMPLE-IRA offered bycompanies such as Boston-based Fidelity Investments.
Fidelity gives employers two investment choices for SIMPLE-IRAcontributions. The mutual fund option enables workers to invest in10 of Fidelity's mutual funds; the brokerage option gives moresophisticated investors the ability to invest in stocks, bonds,certificates of deposit, and all Fidelity's mutual funds aswell as those of other companies.
Employers also are required to match employee contributionsdollar for dollar (up to 3 percent of a worker's salary) orcontribute 2 percent of payroll for all eligible employees, whetheror not they contribute.
Fidelity has eliminated minimum investment requirements andparticipant fees, and is waiving the annual $350 employer fee for1997.
To educate BIZ Experiencess about retirement investing, Fidelityoffers a free booklet, Retirement Plans for SmallBusinesses. For a booklet or more information, call (800)544-5373.
Contact Sources
Fidelity Investments, 82 Devonshire St., Boston, MA02109;
The Money Institute, 22559 Springflower Dr., Golden, CO80401, (303) 281-9783.
