“As a business person, you understand that knowing the facts is essential for making wise decisions.”
Acquiring a loan for your small business is an excellent approach to increase revenue and perhaps increase your sales when the time comes. Most businesses need a loan these days. Businesses need funds for a variety of reasons, including cash flow, growth, or upgrading their premises.
However, there are numerous misconceptions about how to manage your small business cash issues. You’ve probably heard business loan myths; they’re tough to obtain, and your score must be flawless. Furthermore, you should not apply for so much cash; else, you will be rejected. Thankfully, small business loan myths are really not true. Below are major small business loans myths busted.
6 SMALL BUSINESS LOAN MYTHS BUSTED
In this section, we will clarify six commonly held beliefs and traditional business loan myths.
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As my business is new, I can’t get financing
Yes, it can be difficult to obtain funds for a start-up. However, it is not impossible.
Many young businesses believe they must be in business for several years and have developed strong credit before they may qualify. However, an increasing number of lenders are dealing in start-up loans that need almost no business credit record to apply.
When applying for a start-up loan, your own assets will be evaluated more extensively than other forms of business financing. The most crucial aspect of the process will be your own credit record. You may also experience less competitive rates than you would get as a well-established business. But if you want to get money for your new business and are willing to meet the conditions, you can get a loan.
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Only small businesses on the verge of bankruptcy need loans
Small business loans can help businesses in many ways. Small business owners may be reluctant to take out a loan if they think it indicates that the business is in financial distress.
To put it another way. Small business loans can be used for a variety of purposes, including purchasing inventory and supporting expansions. However, returning the debt would increase the company’s monthly costs. As with any financial decision, it is important to only apply if the scenario truly calls for it.
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You will be refused if you ask for too much money
The amount of cash you ask for has no impact on your chances of acceptance, and contrary to common assumptions, financial institutions prefer to grant larger loans because they will generate more revenue back over time. Make sure you know how much money you want to borrow, as well as how much you can manage to pay back each month. Then, start the application process.
Just keep in mind that the lenders will need to evaluate your cash flow to make sure that you will be capable to pay your installments.
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Small businesses are unable to apply for larger loans
Funding institutions are often willing to fulfill large financing requests for the correct borrower; it is more profitable for them in the long term. Don’t be hesitant to request the amount of money that you actually require!
Many small businesses believe that since they are small, they cannot qualify for larger loans. This is not the truth. But, if you are a small business planning to apply for a bigger loan, you must prove that you’ll be able to repay the debt. Keeping this in mind, you must have documentation ready to show your lender that you are in a good financial state to repay the loan.
Many lenders may also request a detailed business plan including all cash projections and business objectives. It will be used to help them make their ultimate decision.
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Interest Rates Are The Biggest Factor
We’re not stating that interest rates aren’t essential; we’re just saying that they shouldn’t be the deciding factor in selecting a small business loan.
It’s easy to become obsessed with the loan’s interest rate. In fact, the interest rate tells us how much this money will cost us at the completion of our repayment. It is, without a doubt, vital information, but it is only one aspect of the whole picture.
For instance, a loan with a low-interest rate that must be returned in a very small timeline may not be as good as a loan with a little higher interest rate and more appealing repayment terms.
Pro tip: Consider the larger picture and what works best for you and your business.
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Business loans are only available through banks
People always tend to associate loans with banks. This, once again, is not correct. There are many reputable lenders who specialize in giving loans to small businesses. While many banks offer good rates on business loans, there are also other providers who offer tailored loans to match your specific demands and requirements.
FINAL THOUGHTS
Financial infrastructure advancements have made small business loans more open and reasonable to small business owners. Thus, it’s important to note that most non-bank lenders provide loans faster than banks.
Furthermore, traditional loan approval times can range from a few weeks to several months. So, non-bank lenders are often the best option for any small business owner looking for a loan for urgent business needs.
At Hasanov Capital, we can help bolster business growth with small business financing options. We are specialized finance and alternative funding platform that is privately owned and operated. We focus on providing capital access to small and mid-sized enterprises in the United States who have typically been neglected by traditional financial institutions. And the ones who may have had trouble receiving timely funding. Get in touch with us today!
