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Wednesday, July 25, 2018

4 Small Business Loan Myths Demystified

If you’ve started out on a business venture, then you’ve probably come across some pretty convincing perspectives on how availing of loans for SMEs is tough. While some of them are true, a vast majority of other opinions seem to be overly exaggerated and blown out of proportion. Here are a few small business loan myths we are going to burst for you.

1 Bad Credit Scores Ruin Your Chances of Getting a Loan

There’s no need to emphasise the fact that your credit score can be a deciding factor when it comes to your loan application. The majority of the lending institutions seem to have added weight to this point by approving applications with good scores. However, this isn’t always true. You can easily get a business loan sanctioned provided you convince the financiers about the profitability of your venture.

2 You’ll Have to Endure Months Waiting for a Conclusive Reply

Another myth Indians have about business loans is that you’ll have to wait for months on end to get a reply on your application. While this may be true for some cases, it majorly happens because of incomplete application forms and a lack of appropriate paperwork. If you are confident that you’ve provided all the necessary documents and a completely filled-out application form, the processing period wouldn’t take very long.

3 You Can Only Get Loans from Banks 

This is yet another addition to common business loan myths that are prevalent among entrepreneurs. There are actually dozens of other viable sources of financial assistance. These include credit unions, personal savings, bank overdrafts, leasings, and supplier credit. The best part about using these sources? You don’t need to wait as long as you do with conventional lending institutions to procure the loan.

4 You Won’t Get a Loan if You Ask for More

This is one of those myths that have been passed around in casual conversations and in various business forums. But the reality is that there is no truth to it. Banks and NBFCs are lending institutions and their prime objective is to provide monetary assistance to those who ask for it and meet the eligibility criteria. You can still get an approval despite asking for a higher amount but this requires you to have a solid business plan to back-up your request. So, stop worrying.

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