Whether you’re looking for funding to start your new business or are in need of additional financing to grow, business loans can be a viable option. Unfortunately, many business owners end up losing out on the funding they need because they falsely believe the many myths surrounding loans for businesses.
They’re the Most Difficult Loan to Get Approved For
Many people miss out on obtaining business loans for the sheer worry that they won’t get approved. Business loans are just like any other type of loan out there. If you understand a lender’s eligibility requirements and properly prepare, you’ll set yourself up for the best chance of success possible. Don’t let the concept of obtaining a business loan stop you from actually taking action and getting one.
You Must Have Perfect Credit
While it’s true that having perfect credit can open you up to more and better financial opportunities, it’s not required for all business loans. If your credit score is less than perfect, you may want to consider alternative lending or private lenders. These lending institutions tend to put more weight on the financial history of the business than your personal credit history.
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Banks Are the Worse Way to Obtain a Business Loan
Just because some banks won’t lend to business owners without a good credit score, that doesn’t mean that they shouldn’t be used. If you have a decent credit score, you may want to consider trying to obtain a loan from a local bank. According to Lantern by SoFi, “Often, an SBA loan is a more affordable form of financing and can provide the working capital you need to grow your business.” While SBA rates do fluctuate, they tend to be exceedingly low. This means more money stays in your pocket with an SBA loan, which is only attainable through a traditional bank.
You Can Only Finance Small Amounts of Money
It’s not uncommon for small business owners to think that they don’t qualify for a business loan because they don’t need to borrow a large sum of money. In reality, microloans are widely available for businesses that only need to have small amounts of cash on hand, such as $25,000. You should never take out a large sum of money if your business doesn’t need it.
They Take Months to Get
Traditionally, business loans did take a long time to be approved. However, that’s not always the case. There are many business loans that you can apply for in an hour’s time and get funded within a few days. Typically, the waiting process will be longer when you are requesting large amounts of money. Your lender should be able to tell you how long it usually takes for a loan to be approved. This way, you can plan around it.
Business loans tend to be one of those gray areas that business owners avoid until it’s their only option. Hopefully, by understanding the myths above, you now know that business loans can be a great way to finance the needs of your business.