Small business loans are often misunderstood, preventing entrepreneurs from accessing valuable growth opportunities. Here are six prevalent myths that could be hindering your progress:
Banks are not always the sole providers of business loans. Think of non-bank lenders, including mortgage brokers and alternative finance companies. These non-bank options often offer more flexible terms, while online lenders can streamline the application process.
Hot Tip: Explore both traditional banks and alternative lenders to enhance your chances of finding the right commercial loans for your needs.
Not at all! Loans can be instrumental for funding growth initiatives, such as asset finance for new equipment, expanding inventory, or hiring staff. Successful businesses often utilise development financing strategically to capitalise on new opportunities and drive growth.
Hot Tip: You can also use loans to lease essential items like cars and other vehicles without paying the full amount upfront.
Did you know that some lenders charge interest only on withdrawn funds, and many offer early repayment options that can reduce overall interest costs? Furthermore, the advantages of obtaining a loan frequently outweigh the interest expenses, especially since interest on business loans is often tax-deductible.
Hot Tip: Assess the potential return on investment against the interest cost to make informed financial choices.
This misconception often deters business owners from applying. Many alternative lenders and mortgage brokers provide streamlined processes, with online applications that can be completed quickly. Some lenders even offer same-day decisions, making the application process far more efficient than commonly believed.
Hot Tip: Look for mortgage brokerage companies that have implemented smart use of tech and tooling to simplify and streamline the process of choosing and getting a loan ... just like Cinch Loans!
While credit history is a significant factor, it’s not the only consideration for lenders. Alternative lenders often evaluate other aspects of your business, such as cash flow and revenue, which can be critical in their decision-making.
Hot Tip: Consider preparing a robust business plan as it can outweigh credit concerns, allowing those with less-than-perfect credit score to qualify for business loans.
This myth can lead to under-borrowing, which can stifle growth. Lenders typically assess your ability to repay rather than merely focusing on the amount requested. Seeking too little can be as problematic as asking for too much
Hot Tip: Take the time to gauge your business needs accurately and justify the loan amount you’re seeking.
There’s a lot to plan for a small business owner. Call us to streamline your purchase and seize opportunities for expansion and development. We can help you with your loan.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
