Last week I explored what sounded like good advice about how to check out a business and figure out if it was legitimate.  Despite some very logical sounding advice, that usually starts with “everyone knows that you should . . . “I found out that it isn’t as easy as it sounds.  Most people don’t know how to check out a business. Last week we checked with the Better Business Bureau and Chamber of Commerce to find out if United Lending is a legitimate business.   This week we are going to try two new pieces of advice – Licensing and references.

I would ask if they are licensed

Licenses?  It is always best to choose and deal with a lender that is well known, because a reputable lender is probably licensed in your state.  But since I am trying to find out about a company I have never heard of -- United Lending Financial Services in Maine, I need a different approach. There are all sorts of different kinds of licenses. Where do I start?

It is easy but it will take some time.  First, I need to find out (1) if United Lending needs to be licensed to offer me a loan California, the state where I live, and (2) if so, is it licensed in California.

First, try asking the lender. The easiest thing to do is to ask them or check their website and look for the licensing information.  For an example of what you should see go here.  What should you ask?  Can you believe what they tell you? No, but take whatever information you can get from them because there are ways to check it out quickly. If they don’t respond to your questions they probably are not a legitimate business. Here are some good questions to ask:

1.  Where is the company incorporated? What year was the company incorporated?  In this case United Lending told me they aren’t incorporated.

If a company is incorporated you can go to the state Department of Corporations or appropriate state licensing authority for corporations, and do a search on the business name.  If it is incorporated you will find it.  To find the appropriate licensing authority in your state go here or here.

2.  If the entity is not incorporated ask:  What type of business entity it is; What state it is registered in, and What year it first registered in that state.  (All states want to collect taxes so if it is a legitimate business it will be registered somewhere.)  United Lending told me it is a small private lending company and is not incorporated.   

3.   Ask if the business is licensed to loan money in the state where you live? If the answer is yes, ask them what license they hold in your state.   You can check this at the state site licensing authority.

I went to lenderlicense.com and clicked on ‘Useful Links.’ When I clicked on “California” I was directed to “The Department of Corporations.” I clicked on Financial Service Licensing Information” and found out that lenders must be licensed in California to offer the type of loan United offered.  Next I searched to see find out if United Lending Financial was licensed.  Ah hah!  United Lending Financial Services is NOT licensed to offer loans in California.  Now that was easy.

If you live in another state that doesn’t require lenders to be licensed I would try the website for your state and local government: From there go to the Attorney General’s site.   First check and see if there are any complaints issued against United Lending.

Next try the Department of Corporations (Some states provide this service on the Secretary of State site).  Maine had a search feature so I was able to search for particular business name -- United Lending Financial in Wells, Maine wasn’t listed.

Finally, just to make sure, I clicked on the “Contact Us’ button and sent an e-mail asking about United Lending Financial Services Company.  Within 24 hours I had an e-mail response – United Lending Financial Services does not exist in Maine. It is a scam organization using a Maine address.

I would ask for references

Great advice, especially if the company is a privately held company.  Ask for references from professional entities, funding institutions, insurers, partners, borrowers, accountants and attorneys. And, ask to see their financial statements.  If they balk or refuse, you have your answer – don’t’ deal with them.

What is your advice for finding out if a business is legitimate?