Small Business Lending: 3 Common Misconceptions
If you are seeking financing for your small company, you might have some preconceptions based on ideas you have heard from other business owners and entrepreneurs. While it is true that finding the right loan for your small business could take some time and dedication, you may find that certain misconceptions or outdated notions make the process sound more difficult than it is. Before seeking business lending for your purposes, consider these misconceptions you might be harboring.
New Business Issues
Are you concerned that you will not be able to obtain needed financing for your new startup? You might have heard that it can be difficult or even impossible for a brand-new company to get a loan right away. If you worry that you won’t be able to get financing until you have established a track record and business credit, consider researching startup loans. This type of financing may require you to document your personal financial history and credit score. If you qualify, a startup loan could be an excellent way for you to obtain the initial funds that you need to get your new business up and running. After your company is well established, you should then be able to move on to more standard business financing, which may carry lower rates than a startup loan.
Likely Wait Times
If you need funding right away, you might worry about how long you will need to wait to be approved for business lending. You may have the idea that it will take weeks or even months to receive the loan you require. Fortunately, the modern digital era has sped up many types of transactions, potentially including loan approval. For business owners who qualify, approval may arrive more quickly than expected. In some cases, you may receive your loan in as little as a few days after submitting your application.
Credit Score Importance
Your credit score or business credit score likely plays a role in your loan application process. If you are concerned that a less than perfect score means you will never qualify, however, you may find that there are alternative forms of documentation that can help. While it is always best to maintain an excellent credit score if possible, you may be able to qualify for a loan by presenting documents that establish your company’s healthy cash flow, financial history and more.
When it comes to business lending, certain common misconceptions may need to be corrected. Try to make sure you have a strong understanding of aspects such as wait times, startup financing, credit score importance and more.
