Note from Editors:
‘Loan approval takes forever’ is one of the myths in lending to small businesses. Find out the other 4 myths – it will demystify the lending process.
by Jared Hecht
With the growing accessibility of information freely available online, modern entrepreneurs in search of #funding to grow their businesses have a huge leg up on generations past. Yet for every bit of accurate and genuinely helpful advice, there is an increasing prevalence of misinformation and myths surrounding the small business lending space. Unfortunately, much of that misinformation can give business owners bad information about how small business loans work, giving them a false sense of their own eligibility.
Don’t miss out on opportunities to secure funding for your business due to false information. Let’s separate fact from fiction and bust five of the most common small business lending myths we hear every day.
1. Approval takes forever.
Whether you’re itching to move forward with a new business idea or you need cash quickly to cover an unexpected expense, one of the most common questions business owners have when applying for funding is, “how fast can I get cash in hand?”
You may hear from well-meaning friends and relatives that getting approved for a business loan can take weeks or even months, but that information is outdated. With new online loan applications, an organized business owner can complete her application in less than an hour, and it can be reviewed and approved within 24 hours of submission. Many lenders can even offer cash in hand in as little as two days.
While some borrowers may take additional time to gather financial statements or get their credit reports in better shape, once you hit “submit,” the approval practice is very efficient. Don’t let the fear of a long approval process hold you back from seeking a loan.
2. New businesses never qualify.
The #startup funding quandary is a difficult one. You need an established business to secure funding, but you need cash in hand to get your business off the ground. Seeking funding from venture capitalists or #angel investors is certainly the most popular route for securing startup funding, but is it the only way?
Many startup entrepreneurs assume that they need to be in business for a few years and have established business credit before they can qualify for a loan. However, more and more lenders are specifically offering startup loans that require little or no business credit history to qualify.
Applying for a startup loan will involve more scrutiny into your personal finances than other types of business loans. Your personal credit score will be the most important part of the application. You may also be faced with less favorable rates than you would receive as an established business. But if you’re committed finding funding and open to the necessary conditions, securing a loan for your brand new business is possible.
3. Online lenders are con artists with unreasonable rates.
We get it. The online alternative lending market is relatively new, and people are skeptical of new things. Unfortunately, many unscrupulous online lenders and brokers have engaged in predatory and dangerous lending practices, giving the entire industry a bad rap.
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Curated from Busting 5 Myths About Small-Business Lending
Note: Featured Image credit to hearsay.ca