Businesses may need to avail of business loans at certain times during its accounting period. This may be for immediate and short-term needs due to cash flow concerns or it can be for additional funding and investment for the business.
Whatever your reason may be to avail of a small business loan, here is a guide to the common myths regarding small business loans that may be debunked at any time.
1. The Perfect Credit Score
While it is true that a good credit score is needed to obtain better loan options and interest rates, a business that does not have one does not mean that it will not be eligible to avail of one. There are now financial institutions that can help the business obtain the loans it needs to cover for any of its financial concerns even with a not-so-good credit score.
2. Business Loans May Take Months to Obtain
With the advent of developments in financial technology, obtaining business loans are more accessible and faster to obtain than ever before. Online applications are now the norm and funds are transferred within 24 to 48 hours after application and once approved.
3. Only a Large Amount of Money May Be Financed
A large amount of money may be needed to be loaned from banks, but this is not the case with private financial institutions who can lend smaller amounts depending on the needs of the business. Businesses have options and that is what is important nowadays.
4. One Cannot Obtain a Loan to Start a Business
With the developments in the global financial market, individuals who want to start their own business now have several options by which they can start their business. Aside from personal savings, there are financial products being offered to those who need help in setting up their own business with very minimal requirements.
5. Business Financing Options Are All the Same
This is a myth that has been debunked for the longest time. Both traditional and private lending institutions now offer a variety of products that may be tailor fit to the needs of the business owner. Business owners are now given more options to choose from depending on what their business needs and what they can afford.
6. Collateral Is Always Needed
There are business loans that would require collateral and there are now loan offerings that are unsecured or do not need one. Unsecured loans may have higher interest rates but what is important is that business owners have the option to avail of one, especially when the need is immediate, and the requirements can be met.
7. Banks Are the Way to Go
Not anymore. With the influx of private and non-traditional financial institutions that are willing to lend a helping hand to business owners now have options and more available avenues when they need financing. A lot of these institutions have also given banks a run for their money in terms of loan products available to small business owners.
8. Interest Rates are the Key
Indeed, interest rates are important when deciding on what loan product a business will be availing of. However, this is not entirely true. Factors such as repayment periods, discounts, and other perks are now taken into consideration to ensure that you will be able to avail of the best loan product for your business needs.
9. The Hardest to Get is a Business Loan
This is not totally true. Especially now that businesses are dealing with the effects of the coronavirus pandemic, business loans are now one of the most sought-after loans, allowing financial institutions to innovate their products geared toward addressing financial concerns of small businesses so they can stay afloat and thrive in these trying times.
10. Failing Businesses are the Only Ones in Need of a Business Loan
This is a myth that has been busted repeatedly simply because even large-scale businesses may need a business loan for several purposes. Nowadays, there is almost always a loan for every financial need of a business and getting one suited for your business is not far from reach.