The Business Finance Store Lending Internet

The Business Finance Store (BFS) states in bold letters at the top of its site: "We Fund Startups & Small Business." As it turns out, even this initial claim is a bold-faced lie. BFS does not "fund" anybody. THEY do not fund!

BFS acts as a middle-man to approach credit card companies on your behalf to get credit cards in your business's name. Here is a list of their lies and obfuscations based upon my experience with them of the last two weeks.

First, we were told that BFS arranges a "line of credit" for our business.

We were also told that there are "no fees" to get the line of credit.

We were told that the interest rates are very low, "Often zero percent to five percent."

We explained that we intended to use the line of credit as a payroll backstop in the event of a cash flow lull. This point is very significant in what follows. We explained the liquidity matters, which is why we were seeking a "line of credit." A genuine line of credit is liquid! It is literally a cash reserve you can draw on and then repay. We were assured that this was a genuine "line of credit," that it was entirely liquid, and that it would be perfect for our stated intent.

We were told that BFS only needed to do a "soft pull" of the partners' credit reports, and that no aspect of the "line of credit" would impinge upon our personal credit profiles, because this would be credit in the name of the business.

After doing more research on BFS, including on this very site, I mentioned to our BFS representative, Patrick, that I was concerned about huge fees associated with the loan process, when he had assured me that "there are no fees."

In what was to become a classic pattern of obfuscation, Patrick replied that "There are no UP-FRONT fees. We do charge a fairly small fee at the time the loan is funded, and most businesses pay that fee out of the loan proceeds."

I then pressed for exactly what that "fairly small fee" would be, and Patrick replied that they typically charge 8% of the loan amount, but that it is only paid at the time of actual funding. So, we were told, we would have actual funding in hand before we would be charged anything. "No risk!"

I said that I still considered 8% a significant, rather than "fairly small," fee and that I already felt that he was not being forthright with me. Instead of saying "no fees" he should have said "no upfront fees," and he should have explained from the very outset that there would be a quite large fee at the time the loan was funded. I should not have had to dig the amount out of him; he should have been forthright about it from the start.

Now, of important note at this juncture is that throughout this process, Patrick was representing BFS as an actual lender, talking repeatedly about their "underwriter" and their funding of the loan.

Ultimately, we decided to give the whole thing a shot, figuring that we had nothing to lose, because we'd pay nothing to see what the story really was. So, we gave the go-ahead.

Patrick called back within a couple of days saying, "Congratulations. Our underwriter has qualified you for $50,000 in financing. So we just need to arrange a conference call with your partners, so that I can explain the terms of the program and then get you out a contract to sign."

At the conference call, Patrick explained that BFS would be applying to a variety of credit card companies in our behalf. Their "underwriter" projected that we would be granted between $10,000 and $50,000 in credit cards as a result of their efforts. In exchange for their efforts to line up these various cards for us, we would be charged 12% of the total credit limits arranged.

We were shocked on many fronts!

First, what happened to "a fairly small fee?" (I did not mention the rate Patrick had earlier quoted me, because I wanted to test him to see if he even remembered!) I confronted Patrick about this, and he replied that "All new clients come in at the 12% fee rate. As we do more and more business with you over time, we can charge a smaller percentage. Some of our long-term clients pay as little as 9% for our services."

I then reminded him that he had told me 8%, and he simply denied it to my face. Sadly for him, I had told my partners about his 8% fee right after he had quoted it to me. My partners concurred, and Patrick immediately changed his story to say, "Well, I told you 8% to 12%."

I responded that even that was at flagrantly disingenuous, because, as he had just told us, NO new client gets an 8% fee. What ALL new clients pay is 12%. So, he should not have told me "8%" or "8% to 12%" or anything OTHER than a flat 12%. Indeed, he did quote me a flat 8%, yet the fact is that BFS intends to charge all new clients 12%.

The point here is that even when you are trying your best to get the real story out of these guys, trying to exercise your best due diligence, they will lie to you until the very last moment when they think they have you suckered in with promises of a "significant line of credit."

So, let's now turn to the actual facts about this "line of credit."

We asked Patrick if BFS actually FUNDS anybody, because they were looking less and less like a "lender" to us, and more and more like a fee-charging middleman to apply for credit cards that we could just get for ourselves if we had wanted to go that route.

He triumphantly told us, "But we do do something for you that you can't do for yourselves. This is the value we add to the process. We arrange these credit cards simultaneously on your behalf employing only a 'soft pull' on your credit reports, so that the card companies don't see that all these applications are coming in on your credit report. If the card companies saw all these requests for credit, then none of them would grant it, because they don't want to be involved in you suddenly getting in over your heads. So, they watch for a lot of activity on your credit reports, and they will deny credit if they see a lot of credit applications coming in. So, we streamline this whole process for you, ensuring that you get quite a few cards before the card companies see all the hits to your credit report. You can't do all that for yourselves."

I replied that this approach seemed to be defrauding the card companies, and that BGS's approach was not supposed to be hitting our personal credit anyway. This was supposed to be a COMPANY line of credit.

I then asked, "Well, how will we have liquidity in all these credit cards? I mean, the whole reason we went down this path with you was to get a 'line of credit' because that would give us an actual cash reserve if needed. I explained this carefully to you. Credit cards severely limit how much you can withdraw as cash. I don't consider a pile of credit cards to be liquid."

Patrick responded, "Very good question, and very astute of you. You are absolutely right, and we recognize this issue and have a nice solution for you. And this is yet more value that we add. On your behalf BFS will make 'purchases' like any other merchant, so these will appear on your cards as actual purchases. But we will in turn hand over the amount of the purchases to you as cash. So, we in effect convert purchases into cash for you. And this way you won't even pay the higher interest rates that the card companies charge for cash advances!"

VERY suspicious now of hidden fees, I asked, "And how much do you charge for THIS process?"

Patrick replied, "Typically only 6% of the amount of the cash we generate for you this way."

We ended the call shortly thereafter, and it didn't take the partners five minutes to unanimously agree that this was an utterly fraudulent rip-off that we wanted nothing to do with.

I then crafted an email to Patrick, outlining the same points I will summarize to end this report. And I told him that I would be posting a report of BFS's business practices on this site.

1) BFS will avoid as long as possible telling potential clients what they will be charged. When pressed, BFS will low-ball the percentage FAR below what they actually intend to charge. They then present potential clients (that are giddy from being "approved" for "a line of credit") with the much higher percentage at a point that potential clients are most motivated to pay it. This is flagrant bait and switch, and it does NOT qualify as "full disclosure" according to Truth in Lending.

2) The phrase "line of credit" is a technical term in lending, and it refers exclusively to an entirely liquid cash reserve that can be tapped into for CASH as needed and then repaid to be tapped into again. BFS intentionally conflates this technical phrase with "revolving credit," which is what a credit card is. By treating all "revolving credit" as the same as "a line of credit," BFS intentionally misleads potential clients into believing that they are getting a cash reserve, when they are NOT.

3) BFS "solves" this problem THEY have knowingly created by generating the needed cash for their clients BY defrauding the very credit card companies that they have worked with to arrange the credit cards in the first place. By acting as a "straw merchant," BFS extracts cash from the card companies that is in actual violation of the stated terms of the credit agreement. A client that willfully participates in this collusion is thereby entering into a conspiracy to commit fraud, as the client knows that these "purchases" are being made to generate cash. BFS then charges an outlandish fee to help a client commit fraud.

4) The way that BFS garners a number of cards on behalf of their clients is itself a carefully-crafted game to keep card companies in the dark about the total indebtedness of the people to whom they are issuing credit. By manipulating how the cards are applied for, BFS circumvents the credit report protections designed to keep the very sort of over-crediting from happening that BFS arranges. Now, I know that few will find sympathy in their hearts for credit card companies. But, this is verging on fraudulent, regardless. BFS's M.O. seems to be founded on the notion of defrauding credit card companies, and then charging clients outrageous fees in order to do it and even get client complicit in it.

5) There is no "underwriter" or any such process at BFS, because BFS is not an actual lender. Their "approval" means nothing more than that somebody at BFS believes that your credit is good enough that they can scam up some credit cards on your behalf. Do NOT believe what BFS states on their website! They do NOT "fund" anybody! They have no "underwriter," and the "qualification" process is really a "pre-qualification" that means NOTHING more than that BFS will take a shot at shopping for some credit cards for you.

6) The "approved" figure BFS quotes you at the time you are told what they will really charge you is at the absolute TOP of what they can even imagine to scam up for you. If you hear "$10,000 to $50,000," you can be assured that what you MIGHT get out of the deal is a number of low-limit cards that collectively tally up to perhaps $10,000. And then BFS will take 12% right off the top of your new credit. Do not believe what they can claim to get you! And be aware that you are not getting "a line of credit" from BFS. What you are getting is a pile of credit cards with which you start the process already in significant debt!

I am astounded that the US Attorney General and other Federal agencies have not shut these guys down yet! BFS readily admits to committing fraud against credit card companies, and EVERY aspect of their dealings with potential clients are riddled with obfuscations and outright lies.

"Truth in Lending?"

Right out the window!

Beware, unless you are so desperate for funding that you are prepared to enter into conspiracy to commit fraud.