FTC-SBA warning letters caution against misleading loan program claims

In the face of COVID-19, many small businesses are looking for help from the CARES Act’s Paycheck Protection Program. They may apply for PPP loans through Small Business Administration-authorized lenders and others the SBA has determined to be eligible. But there are concerns that some companies have falsely claimed an affiliation with the SBA or approved PPP lenders, or have represented untruthfully that people can get PPP or other SBA loans by applying on their sites. Following up on warning letters sent last month, the FTC staff and SBA sent warning letters to six more companies, urging them to take another look at their marketing materials and remove any deceptive or misleading statements.

Here are the companies that received the joint warning letters and the kind of claims – among others – that attracted attention from the FTC and SBA.

Madison Funding Partners, Inc.  According to the warning letter, the New York-based company has claimed on its website or in social media that consumers can “Get matched to a PPP lender now!” Earlier versions stated that people who were “Ready to get started with Madison Funding Partners” could “apply for the PPP Loan Now,” with a button directing them to “Apply Now.” Promotional messages also said that consumers who contact the company will “receive an approval within 24 hours and be funded within 48 hours.”

NYMBUS, Inc.  The warning letter says the Miami company has claimed on its website and in social media that for people looking for PPP loans, “the fastest way to your loan is here” and that consumers can click to “Apply Now.” What’s more, the company has represented that “The NYMBUS SmartLenders Program is able to process your SBA Paycheck Protection Loan faster than any other source.”

SBADisasterLoan.org.  In addition to the name sbadisasterloan.org, the warning letter cites statements the company has made on its website that it provides “SBA Disaster Loans,” that “$484 Billion Now Available COVID-19 Relief Funding!” and that businesses can “Get Your PPP Loan Today.” The letter also raises concerns that the company has represented it operates from the SBA’s Washington, D.C., address and that it offers “SBA Lending experts” and “SBA Loan Officers” to businesses.

Small Business Advocates – Los Angeles, d/b/a SBA Los Angeles.  On its website and in social media, the Pasadena company has repeatedly referred to itself as “SBA Los Angeles,” “SBA,” and “SBA LA.” The warning letter also cites the company’s claim that it offers “SBA Loans” to businesses, including to “Pay An Emergency Business Expense.”

TF Group, Inc., d/b/a Taycor Financial.  The warning letter raises concerns about the practices of the California company or its lead generators. For example, disasterloanassistance.com uses the official logo of the SBA and claims to offer consumers “The Fastest & Easiest Way to Apply for PPP!” That same page purports to offer “COVID-19 SBA Loan Programs” and invites people to “Quick Apply” by submitting their business and financial information. According to the site, consumers can “Complete an application in under 15 minutes” and “GET FUNDED FAST!” and “Funds are available within 48 hours of approval.”

USAFunding.com. The warning letter raises a number of concerns about representations on the New York company’s website. For instance, immediately after describing the law that authorized the Paycheck Protection Program, the company stated that there will be a “high volume of applicants” and “encourage[s] anyone interested to apply immediately,” followed by an invitation for consumes to “APPLY NOW.” The company also listed companies that qualify for PPP loans and immediately directed people to “APPLY NOW.”

The letters remind the six companies that misrepresentations – express or implied – that are likely to deceive consumers violate the FTC Act. What should the companies do next?

• Review their marketing materials – including websites, social media, email, telemarketing, and text messages – to ensure all deceptive claims are removed,
• “[A]ct immediately to remediate any harm to small business consumers stemming from such claims,” and
• Notify FTC staff within 48 hours “of the support you have for the types of claims described above and specific actions you have taken to address the FTC’s concerns.”

And what should your company do? First, make sure your marketing materials aren’t making false or deceptive claims to small businesses already struggling to stay afloat. Second, if you’ve spotted a questionable representation targeting your small business, report it to the FTC, using the special COVID-19 button at the top of the FTC Complaint Assistant page.