Advance fees paid represent neither a promise or guarantee that funding will be secured.
Dictionary.com defines advances fees as money furnished by a company to a financier under a promise to procure funds for it. This is incorrect. A financier who makes such a promise is a crook. There are a number of explanations as to why. First and most obviously, the financier is not the person providing the funds so how can he make a promise? Secondly, it is highly unethical if not illegal to make a promise to a client seeking funding. Not even those providing the funds make promises. The closest thing to a promise is a letter of commitment, but even this is not a promise, only a commitment to fund.
The California Department of Real Estate defines advance fees as follows. Advance fees include any up front fee or retainer collected by a broker in exchange for the promise to perform certain services (Business and Professions Code Section 10026). Again, note the use of the word promise.
The entire argument regarding advance fees being a scam revolves solely around the promise. Here at The Web Lender Portal we make it clear to every (potential) client, we offer no guarantee or promise that funding will be secured.
Individuals and businesses pay fees for a wide variety of reasons. An individual may pay a financial advisor a fee for helping choose and manage investments, and a family may pay a fee to a real estate broker when selling a home. A business may pay a fee to an accountant to help manage its books, and to a security company to make sure that the building is protected after work hours.
Fees charged by banks are less likely to be transactional in the sense that the account holder has not requested a service. In some cases, as when an account is overdrawn or a credit card payment is made late, a fee is charged as a penalty. In other cases, such as when a bank charges a monthly fee to checking account holders, the fee has little to do with the cost of maintaining the accounts.
Borrowers seeking business finance who refuse to pay a finance facilitator rarely if ever receive funding. The majority of them won’t pay because they know they are not fundable, have no faith in their own project, or express ignorance of the funding process by asking for a guarantee to be funded. Yet they themselves are not able to secure funding without the help (service) of a finance facilitator who they expect to work for free on their behalf. Such borrowers don’t deserve to be funded.
Funding any project is based almost entirely on two principles. Truth and facts. When everything a borrower claims to be truthful is proven truthful and all the facts he claims are proven factual funding is achieved. Omitting something which a borrower feels irrelevant or making false or unprovable claims is cause for immediate disqualification.
Nobody was ever ripped off by paying advance fees unless they knowingly did so after receiving a promise and/or a guarantee from the entity offering a service. In such cases both the borrower and the entity are at fault.
It is common practice within the financial services sector to charge a fee in advance for a service. When you don’t pay the fee don’t expect the service. Just be careful to not conduct your business with brokers offering a promise.
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