Navigating the lending landscape seems to be an eternal struggle for small businesses – thanks to the series of misconceptions associated with small business financing, in general. Small business lending rules that existed 10 years ago, don’t really exist anymore. If you have a credit score of 680 or above, some kind of collateral and some experience to boot, you will easily qualify for a loan right? Not really! As a small business owner, there are still chances of you being turned away.
Considering the difficulties of securing a financial assistance from banks—a bank loan itself is considered to be a myth – i.e. a myth, which is not likely to transform into reality anytime soon. In the course of the post, find out why applying for a traditional bank loan will probably leave you disillusioned. As you peruse further, you’ll be greeted with a series of myths associated with small business financing.
Myth #1: You will be able Secure a business loan from a bank
You start off by misjudging your needs in the first place. A credit score above 680, substantial collateral and a few years of exposure to your field might be good enough to promise you a long-term (5-10 year) loan. However, applying a long-term loan doesn’t make sense when you’re looking forward to fulfilling short-term financial needs such as purchasing inventory or paying off salary. Long-term loans are too expensive a proposition in such cases.
Moreover, the creditworthiness of businesses is actually evaluated in a way more complicated fashion than you could ever imagine. The bank is most likely to look at multiple data points including the cash flow of your business to determine its repayment capacity. If you’re a small business with a fairly healthy turnout, you can still qualify for a loan – just that it might not be from the bank itself.
Myth #2: Securing business loans is a cumbersome affair
That’s because you are too consumed by the way the banks function. There are borrowing options that transcend banks! Trust us when we say this! Have you considered quick loans online? The internet offers you access to services of a plethora of non-bank lenders who guarantee loan approval in seconds. If your immediate business needs can be sponsored within $1000 – 1500, make sure you’re exploring their services without fail. If approved, the money will be deposited to your bank as quick as within 24 hours!
Myth #3: Non-bank lenders are ONLY suitable for individuals who are unable to secure loans from banks
On the contrary, the non-bank lenders have become popular with everyone, who is reluctant to put up with the arduous lending processes associated with the traditional banks. It’s true that there are many borrowers who are seen turning to non-bank lenders only after their applications have been turned down by banks. However, it’s also true that there are many businesses that explore non-banking alternatives at first – quite simply because they enjoy access to funds within 24-hours!
Myth #4: I should apply for loans only if I am struggling with my finances
Not really! There are dynamic, successful visionaries of sorts who access business loans to materialize their expansion plans. They may mull these loans even for operational improvements or for bridging temporary financial discrepancies using bridging loans during a challenging season.
Under no circumstances, as such, it should be arbitrarily assumed that these loans are taken only when businesses are essentially staring at financial meltdown of sorts. In fact, financial specialists agree that you aren’t required to be a financial genius to actually understand why these small business funding alternatives actually make sense – not only when you’re cash-strapped but also when you’re exploring expansion opportunities.