By Carla Freberg
Myth:
The bank is the best option for getting a small business loan.
Fact:
Getting a small business loan approved from a bank can be difficult. However, there are alternatives that SBOs can choose from that don’t require collateral, extensive paperwork or a near-perfect credit score. Alternative lenders have created a digital bridge between business owners and business loan products. The simplicity, efficiency and fast turnaround times associated with online lending are huge benefits for business owners. Online calculators provide instant loan estimates, loan applications can be completed and submitted in a matter of minutes, and sophisticated web-based technology helps accelerate the credit decision process. All of this adds up to a small business loan process that is fast, easy and hassle free.
Myth:
A new business will not qualify for a loan.
Fact:
Banks, credit unions and alternative lenders have specific requirements for their business loan programs, and time in business is at (or near) the top of the list. In order for a business to secure capital, it needs to be operating for a couple of years and have established credit. That being said, there are startup business loan programs available that involve personal credit scores, personal finances and collateral. These programs present a greater risk to the lender, so they normally have higher interest rates.
Myth:
A credit score is the only thing that matters.
Fact:
Nothing could be more inaccurate. When being considered for a small business loan, lenders will look at a whole host of things in addition to a credit score. These might include time in business, revenue reports, cash flow statements, financial documents, and a business plan. Because of this, SBOs should prepare themselves for success by getting their necessary paperwork in order and reviewing their credit reports to identify and address any inaccuracies.
Carla Freberg is the director of sales of the Vendor Services Group, Balboa Capital.
