Small business owners have joined the group of people that get scared at the mention of the word ‘loan’. The problem has increased in magnitude to a point that fewer small businesses are willing to visit their banks for a loan to help the startup.
In the US alone, more than $50 million is released to startups each day in a year to support them financially. With the assistance of the Small Business Administration, alternative banks and lenders can loan money to startups.
Therefore, what myths regarding small business loans should owners of such enterprises seek to overcome?
- Acquiring the loan will take ages and involve tons of paperwork
There is no difference between the time taken to apply for and get approval for SBA loan and the other types of conventional loans. Applying for such a loan from a qualified lender is the best way of reducing the time it will take to learn whether you have won approval or not.
- SBA provides loans thus eliminating the need for visiting banks
It is wrong to imagine that SBA provides loans. SBA is nothing more than a governmental program formed with the objective of decreasing risks to banks that desire to issue loans to small businesses.
- Perfect credit is a requirement for obtaining SBA loans
A business owner with low credit scores should not conclude that he has zero chances of getting approval for his request for a loan from the bank. Perfect credit scores do not translate to loans. The emergence of alternative lenders has allowed for other factors to also come into play.
- SBA loans come with higher interest rates as well as fees
SBA has worked hard to ensure that small businesses pay lowest fees and interest rates for all types of SBA loans. SBA monitors interest rates closely. SBA limits the amount of interest rates and fees that lenders can charge the small business.
- The business is doing well thus does not need business loan
The growth of more small businesses depends on acquisition of business loans. Finding extra funding helps support all the growth that you believe the business needs. A growing business soon requires expanded cash flow to support daily operations.
- Only banks are good for obtaining business loans
Depending on the size of the business loan that you need, the best approach is to look at alternative lenders if in need of between $500 and $20,000 in funding. Banks are good when you need more money for a longer period and at lower interest rates.
- Asking for Bigger Smaller Business Loans leads to Rejections
The amount of loan that you need does not influence the bank to reject or approve your application. The bank and other alternative lenders look at several factors other than amount that you need.
The increase in applications for small business loans is partly due to the incredible work that SBA has done in the US. All projections indicate that the interest in small business loans will continue increasing, thus the importance of separating truths from myths.
Learn more on how to get a loan or a grant from the government for your small business from the video below.
Therefore, it is important to learn the basic truths regarding the business loans before submitting your application. Do not limit your chances by believing in an untruth or a myth. Talk with SBA and find out more from their experts or representatives.
With such knowledge, your goal of growing the business and ensuring that it remains afloat in the face of intense competition as well as numerous other challenges will be much easier because of the business finances that you are able to obtain through small business loans.