Busting 3 Popular Myths About Business Loans

There’s a lot you need to know about loans before you even consider applying for one. In a similar vein to personal loans lenders, business loans are approved based on a credit score of sorts that can be improved or harmed based on how you handle your finances and how successful your business model has been over the last tax period.
It sounds simple enough to successfully secure a Business Loan but in reality it is fiercely difficult unless you know what you’re doing. To make things a little easier, here’s a few Business Loan myths that we’ve expertly debunked on your behalf:
New Businesses Don’t Qualify for Loans
This couldn’t be less factual if it tried. New businesses generally need some kind of financial support and securing investment isn’t always easy but it is most certainly doable. Investors don’t look upon new and start up businesses as non-viable entities, instead they seek a way of securing their funds against collateral such as buildings, vehicles or other tangible items of value.
It might sound like a big risk to borrow money against possessions but it can be the only way to secure the funds you need for your business. If the idea is strong enough, and the plan easily executable, you may not need to go down the route of securing funds but these instances are very rare.
Business Loans Take a Long Time to Process
This is also false. Business Loans take no longer than personal loans in most cases – similar checks are carried out and financial assessments take a few days at most. Annoyingly, if the results of a credit check come back instantaneously it generally means the score is poor and unsuitable for lending.
Some lenders now offer Business Loans in a similar format to the personal Payday Loan that causes so many so much difficulty – they should only be used in dire circumstances and never relied upon for extended periods.
Credit Scores Mean Everything
Yet again, there is the belief that all money matters are dictated by credit scores that take years to improve and seconds to destroy. It simply isn’t the case, especially with Business Loans as your personal credit score doesn’t reflect the potential earnings of your business. There are a number of reputable credit report comparison sites available online which can help guide you through improving your score and bettering your chances at securing credit.
Not only can loans be secured to assets and collateral to make things easier, the business plan has a great deal of influence when a lender makes a decision. If there is a tight, easily executable plan in place for a product or service that has a real chance of taking over the market then a lender will find it very difficult to say no to you.
There you have it; three Business Loan myths completely debunked. However, it would be wise to continue your research on Business Loans and look at reliable reviews online before making the step to applying. There’s a lot to take in when applying and a lot you’ll need to show to the prospective lender – they key factor will be the reason for the loan itself: slow periods make staff wages difficult to pay and stock is expensive so just be honest with your lender and they’ll find it much easier to say yes.