You shouldn’t always believe what you’ve heard or read on the internet; the same is true for business loans. There are plenty of half-truths and myths out there that mislead people. As a business owner, you should be thorough with your research regarding these matters. But we’re here to help you by debunking some of the biggest myths regarding small business loans.
A perfect credit score is a must
Your personal and business credit reports will be under scrutiny once you apply for a business loan. But if you don’t have a spotless credit history, you don’t need to worry. Many business owners don’t have perfect credit histories, and lenders are not that strict regarding this matter. Also, this will vary depending on what type of loan is being applied for. For example, short-term loans will have more lenient credit history requirements than long-term ones.
Business loans take forever to get approved
Most borrowers plan ahead and prepare all the necessary documents and apply for a loan several months before they actually need the funds. With that said, people may tend to think a quick loan is not possible. This is false. There are a lot of alternative lending companies out there that business owners can get in touch with through the internet. Once they get approved, funds can be granted in a matter of days.
New businesses can’t get approved
People may think that this is true due to the fact that lenders usually check on the company’s financial history, but new businesses can actually get loan approvals, too. An SBA-guaranteed business loan is one of the ways to help you get started. This type of loan can offer you up to $50,000 to help you start your company.
Only large funds can be borrowed
This is absolutely false. Although banks tend to go for bigger loans that are more lucrative from their standpoint, there are alternative lenders out there who cater to microloans. Small businesses can borrow from as little as $500 to $50,000. Remember, a good rule of thumb is never to loan more than what your business actually needs.