Fortunately, times, when you had to wear your best and stand at the bank for hours with numerous papers in your hands, hoping to get approved for a business loan, have passed. Getting funding for your business in a bank is still a complicated and lasting process. Moreover, such things as availability of big loan amounts only, high origination fees and tight regulations make it extremely inconvenient.
But small business lending is developing very fast so numerous alternative lending options are available for small business owners today. With new technologies and options, there appear new myths. Don’t let anyone get yourself confused and know what’s true.
Myth #1: You Can Only Get Approved if Your Credit is Perfect
Yesterday, today and tomorrow – lenders will always take a look at your credit history and pay attention to your credit score. Before filling out a loan application you should get to know how to get a business loan and keep in mind that a good credit score is important, but not the crucial factor. Your credit history isn’t the only indicator of a healthy business. Thus, today’s lenders pay attention if your business is successful, developing and has a good reputation. They use modern technologies to appraise your business’ creditworthiness and understand how you will repay a loan.
Despite the fact that credit history doesn’t have so much weight today as it did in the past, it’s still necessary to keep it in good condition. If your credit score is low, do your best to improve it and be ready to discuss your company’s credit experience.
Myth #2: Faceless Algorithms Have the Final Say
As we know from the last Republican debate, nobody has big plans concerning small business branch so business owners shouldn’t expect any big changes. Whether it’s good or bad, loan algorithm is slowly losing its face but it doesn’t mean that computers make final decisions. New technologies allow computers to analyze a borrower’s financial behavior and ability to make payments, but the only human mind can truly understand whether one or another loan application deserves to be approved.
Sophisticated programs and algorithms just can’t judge consumer’s repayment ability as much as a human can. That’s why modern lenders successfully combine using new technologies and human minds when it comes to giving out loans. When choosing a lender, look for a lending company that has employers to discuss your business ambitions with. Try to present your business in the best way and to explain how a loan can make it better. Also, talk about your financial opportunities and be ready to explain how you will repay your loan.
Myth#3: Application Process Always Takes Months
Compared to other options, banks usually offer the best loan rates and conditions. But if your business requires quick funding than you have reasons to consider alternative financing. When applying for a bank loan, you should have time to get numerous documents ready and to provide necessary financial statements. Also, you should be patient because as we said before, getting a loan from a bank is often a long process. Another point to keep in mind is that many banks don’t deal with businesses that need a loan less than $1 million.
Fortunately, today we have many alternative options available. Companies like Personal Money Service provide fast and easy application forms, so it won’t take more than 10 minutes to fill it out. Some lending firms offer a really comfortable application process and ability to get business funding in less than 2 weeks once your application is approved.
It’s important to know your priorities. If saving time is one of them and you need to get business funding shortly, then pay attention to alternative lenders. However, don’t forget that everything has a price. Thus, you have to be ready to pay for the convenience by accepting relatively high interest rates and sometimes confusing terms. Review all the options carefully and consider all the pros and cons before making the final choice. Act wisely and your business will prosper!