Whether you are planning a start-up or looking for business expansion or just want a helping hand with your operational costs, a business loan is an answer. However, misleading information and misconceptions can act as hurdles in your hunt for some extra funds.
Let us have a look at the top 5 myths and the clarification to help you with some reliable information that can help you choose the most ideal business loan for your company.
Myth 1: Business loans are provided only by banks.
Well, we call it a myth because it’s not true. This of all times is the top-most myth when thinking of procuring a business loan. Even if you already know that business loans are available with other lenders, you must have a look at the innovative lending solutions by Non-Banking Financial Companies (NBFCs) such as Fintechs. They are holding the biggest share when it comes to business loan disbursements, especially to the Micro, Small & Medium Enterprises (MSMEs).
Besides, they offer quick loan process approval with minimum documentation and even without collateral (unsecured business loan) making them the friendliest of all available options. They also customise business loan options according to the buyer’s specific needs.
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Myth 2: A small business cannot get a big figure as a business loan.
This is yet another common myth that keeps many small businesses from even presenting forward their loan applications. Being a small-sized unit does not restrict you from the application process. In the event, you can demonstrate and convince your business model and perspectives, the lenders can see you in a position to be able to repay the debt on time. Besides, this offers lenders also to make more money in the long-term. So, they tend to see such business loans from a business perspective. Your cash flow statement, cash projections and goals (both long-term and short-term) can help the lender develop an insight into you as a reliable borrower.
Myth 3: Seeking a large amount of money will get the business loan application to rejection.
Well, it does make sense. But flipping the coin, you will be able to see that an application figure does not guarantee a business loan approval. And similarly, you cannot even anticipate a rejection. During the evaluation of your loan application, the lender will tend to see how much you have asked for and what they have to offer you the best. It is possible that you may not get the complete amount approved, but it is also possible that the amount that gets passed surpasses your expectations. Your business proposal will make a large difference in what the lender will think about how you’ll be able to repay the debt. And where the touchpoints of both borrower and lender tend to meet, bingo!
Myth 4: Loan application is a time-consuming process.
Well, this holds true in case you apply for a business loan from the traditional banking system. However, the marriage of technology with innovative lending solutions led to the emergence of Fintechs which are still on the rise. The digital application process, evaluation and loan disbursement are now possible with just a few clicks. With some very quick lenders such as Oxyzo, you can even expect to receive funds in 2-3 days of your application approval.
Myth 5: You need a business loan means that your business model has failed.
This is absolutely not true! Business loans can be used for a variety of purposes. And any business size can apply for a loan and make the best use of it for several reasons. One may need it for business expansion and that definitely means a successful business model trying to increase its market capture.