Myths About Small Business Loan
Small business loans are excellent, resourceful tools for financing SMEs. However, they are often considered dubious due to some stupid myths.
When you are the owner of a small business, you tend to think more cautiously and always keep an eye on potential impedances that your trade might encounter. However, this ultra-conservative nature of SME owners can sometimes become a hindrance for them, specially in the area concerned with small business loans. In the recent times, a number of myths have developed around them and they must be debunked for business owners to understand what small loans are all about.
#1. SBAA Lends Business Loans Directly
The SBA (Small Business Association) of Australia is in place to support and advocate SMEs. Its main focus is aligning with primary stakeholders to make sure that SMEs get better economic policy. However, the organisation does not sanction small business loans. Rather, it offers tools and resources like educational evenings, networking events, etc. to SME owners so that they can proliferate their trades.
#2. No Loan Without Proper Business Plan
This myth holds true only if the finance is being sought from a bank. A well-outlined plan helps the bank to understand how lucrative the business is and whether executing the indicated measures would bring in profit or not. However, a loan can be obtained even if there is no business plan. Lenders who provide quick business loans do not check financial statements. All they want to know about are credit history, experience, monthly profits, etc.
#3. Large Amounts Are Usually Not Approved
Small business owners often fear that they would not be able to get a large loan from any lending firm or bank. However, this is not at all true because lenders don’t provide money based on the nature of a business, but the owner’s ability to pay the premiums consistently. Rather than worrying about the amount, a borrower should be more concerned with their documentation, credit rating and business plan.
#4. Lengthy Processing Time
If someone is applying at a bank for a small business loan, the approval process may take months. However, same is not the case with alternative lending firms because their approval and processing time is often as less as 24 hours. Besides that, the money is provided to the borrower within 2–3 days.
Thus, SME owners need to bear in mind these rumours and the truth behind them when considering small business loans as financing tools, because they are easier and quicker to get than secured amounts borrowed from banks.