Small Business Loans

4 Myths About Small Business Loans: Debunked 

»Posted by on Jul 31, 2018 in Small Business Loans | 0 comments

If you want to start or expand a business, you will surely need a capital. If you also want it to be successful, you have to be financially stable. The operations need cash to run, and it will surely help you expand to new markets. Aside from getting investors to invest on your small business, where else can you get money? In the field of small business, the biggest myth is that getting a loan is bad. Even when they are tight in cash, why do small business owners don’t get a loan? Is it that bad?  

 

There are many misconceptions and myths that surround loan, especially in the eyes of entrepreneurs. If we tell you that what you know about loans, would you believe us? That’s why in this article, we decided to debunk these myths and why applying for a loan in a loan company Utah is not bad for your business.  

Myth 1: Bank is the Best Option for Loans 

Our first notion of loans is that we should apply one in a bank. One of the myths is that a bank is the best option for a small business loan. The truth is that big banks only approve 23% of business loans, while small banks approve 48.7% of them. Banks are not the only source for outside funding, you can apply a small business loan from other financial institutions. There are many alternative financial sources that you can apply to, like merchant cash advances, nonbank lenders and accounts receivables factoring.  

Myth 2: You are Not Qualified for Loan if You Have a Bad Credit 

The reason why banks are not the best option for applying a business loan is that they only approve those who have a perfect credit score. So, another myth to debunk is that you’re not qualified for a loan if your credit is bad. Yes, most financial institutions won’t approve your loan if you have a bad credit. But would that leave you hopeless? You’re not completely out of luck. You can apply for a loan in nonbank lenders, who look at the revenue you bring in annually and the cash flow situation of your company. If you have a bad credit but your business is generating a steady revenue, there is still hope for getting approved.  

Myth 3: Loan Application is Time-Consuming 

If you apply in a bank, the application is really time-consuming, yes. It will take you 2 months before actual money is deposited on your account. You run a business, and you need it right away. Is it possible to process the loan in a matter of time? Yes! Let’s go back to myth #1. Banks are not the only source of business loans. As we mentioned, you can apply in nonbank lenders which the process will only take a day or two.  

Myth 4: Only Failing Businesses Need Loan 

Now, the most popular myth of all is that those who apply for a loan has a failing business. The truth is, small businesses will encounter cash flow problems at some point. Such situations won’t destroy a business unless you let them to. You can regrow the business, and you will need cash for it.  

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