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KARE 11 Investigates: SBA loan scam targets MN business owners

Real-looking emails about emergency loan applications claim to be from the Small Business Administration. They’re really a COVID-19 ‘phishing’ scam.

SHAKOPEE, Minn. — A small business owner has an urgent warning for other Minnesota businesses.

Beware of an apparent ‘phishing’ scam targeting small businesses rushing to apply for a newly approved SBA emergency loan program.

“This is the perfect set-up for a scammer,” said Alicia Coles.

She and her husband run Advanced Commercial Interiors, a small business that installs office furniture throughout the area.

Like many other businesses, they’ve been hit hard by the crisis.  “It has decreased our business by almost 70 percent just in the first 10 days,” she said.

Applying for a loan

Alicia says she wants to keep her company open to support their 20 employees. So, to help keep it afloat, she went online this week to sign up for the government’s new coronavirus emergency loan program from the SBA – the Small Business Administration.

Credit: KARE 11
Small business owner Alicia Coles is warning others about a scam email.

The website was flooded, but Alicia was able to apply. “I did get through, registering for a profile and was assigned an application number.”

She used her company email address when she applied.

But later an email landed in her husband’s email account confirming an application had been submitted.

It claimed to be from the SBA – and even included the agency’s official logo.

To complete the loan application, the email said they needed to complete – and return – an IRS form with their tax information.

Credit: KARE 11
This email looks like it came from the SBA, but it’s actually a scam

“This looked real?” investigative reporter A. J. Lagoe asked.

“It did,” she said. “It looked very, very legitimate.”

Phishing scam

Fortunately, Alicia was suspicious.  Why did the email go to her husband’s account, not hers?

Turns out, the email is part of what experts call a ‘phishing’ scam. Identity thieves use real-looking emails to trick people into turning over their personal and financial information.

When Alicia checked carefully, she discovered the application number in the email did not match the one she already had.

What’s more, although it says it’s from the Small Business Administration, a closer look reveals it came from a private email – someone calling themselves Philip Farmer.   

Credit: KARE 11
A closer look reveals the email came from a private address, not the SBA.

“Had I not taken a closer look at this, it’s definitely something I may have missed” Alicia told KARE 11.

Answering that email could have left her wide-open to identity theft.

“This individual would have my business tax ID number, my social security number, my birthdate – all of my personal and business information,” she said.

“This could have been devastating?” Lagoe asked. “Absolutely,” she replied.

Authorities cracking down

Email scams are often based overseas and are notoriously difficult to trace, but federal authorities are trying to crack down.

“We’re looking at phishing scams to try and get information preying on individuals,” said Minnesota U.S. Attorney Erica MacDonald.

She is urging people to report suspected COVID-19 frauds to a new hotline set up by the National Center for Disaster Fraud. The hotline number is 1-866-720-5721.

Credit: KARE 11
Minnesota’s U.S. Attorney wants you to report COVID-19 scams.

The Minneapolis FBI office is warning people to be especially cautious in these troubled times. Experts say thieves adapt old scams to new emergencies like the coronavirus crisis.

“These scammers just try to prey on people who are stressed and who want information,” said FBI spokesman Kevin Smith.

And from one small Minnesota businesswoman to others, this warning.

Alicia Coles says, “Keep your guard up.”

“To take advantage of companies at a time when they’re already hurting, it’s like kicking somebody when they’re down.”

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KARE 11’s coverage of the coronavirus is rooted in Facts, not Fear. Visit kare11.com/coronavirus for comprehensive coverage, find out what you need to know about the Midwest specifically, learn more about the symptoms, and keep tabs on the cases around the world here. Have a question? Text it to us at 763-797-7215. And get the latest coronavirus updates sent right to your inbox every morning. Subscribe to the KARE 11 Sunrise newsletter here. Help local families in need: www.kare11.com/give11

The state of Minnesota has set up a hotline for general questions about coronavirus at 651-201-3920 or 1-800-657-3903, available 7 a.m. to 7 p.m.

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