There are so many myths surrounding loans that could make anyone cringe or run away from the thought of ever applying for a loan and can cause confusion among small business owners. Many small businesses will require a loan at some point. Whether it’s for working capital, expansion, purchase of fixed assets, or improving services, companies can require access to cash for a wide range of purposes.
If you are unclear about business loans and want to separate facts from myths, we’ve busted some of the myths in this blog post!
Myth 1: Loan Applications Require Collateral
Let me start off by saying, No Sir, you do not! Several small business loans can be availed without any collateral requirements. You don’t need to provide documents or evidence that show you have properties, lands, or investments before applying for a loan.
Collaterals can be a scary part of the borrowing procedure for many small business owners, as he or she is applying for a business loan because, in the very first place, there is a fund crunch. Granted that many banks and businesses require their borrowers to provide collateral in exchange for funding but there are exceptions like Oze! Instead of collaterals, some lenders will ask for a personal guarantee from the applicant. This means that the applicant will be personally responsible for paying back the business loan amount with the interest added. In case, the business owner misses payments or defaults on the loan, he or she has to cover the balance out of his or her own pockets. Depending on the business owner’s financial position and business status, this could be a worthy trade-off for the applicant.
Myth 2: Only Banks Provide Business Loans And It’s Time Consuming
Please, miss us with that! In the good old days, the only way to secure a business loan was to compile numerous records, head to the bank, and wait for weeks or months to get it approved. However, things have changed drastically. People always seem to equate loans with high street banks. Again, this is not true. There are plenty of other lenders out there specializing in providing loans to small businesses. And, although many banks provide great deals on business loans, there are also other lenders providing tailored loans to meet your business needs. Getting a business loan is certainly not a cakewalk. But, it is not something like building a rocket either. Loans vary based on case-by-case. Several factors affect the approval of a loan and the amount of loan sanctioned, including business requirements, finances, credit history, plans for the funding, etc. Although you’ll need to provide a lot of detailed information about your business when applying for a loan, the process is nowhere near as long and complex as you might think. Thanks to advances in technology, applications can now be completed quickly and easily online. In some cases, you can even receive the money in your bank account the same day.
Myth 3: It Is Risky To Apply For A Business Loan Online
Okay, pull up… Take deep breaths…. Great! I can relate to this concern because of so many Ponzi schemes out there. With digitization taking over our lives, the entire process of applying for a loan has become hassle-free. However, there are a few reservations about applying online as people are not sure about how safe and secure the medium is which is totally understandable. You can do your personal research before applying for a loan with any firm, just to clear your doubts. If you apply for a business loan online you could secure better deals and you don’t have to worry about leaving your businesses to go to their office to apply for the loan. With this in mind, it’s certainly worthwhile shopping around for your business loan and weighing up all of your options.
Myth 4: Only Failing Businesses Require Loans
Okay okay, failing businesses do need loans more than other businesses especially when self-funding is no longer sufficient to keep the business running, and all other resources have failed. It becomes imperative to get a loan to save their business from dying. Loans are not for struggling businesses alone, striving businesses can take loans to boost sales, expand their business, or they may want to get more sophisticated and modern equipment or introduce a new product. In a stable business, the loan is directed wholly towards getting profit from the business. Extra cash flow can also help to manage seasonal dips or provide greater flexibility to make the best decisions for your business. Loans can also be used for things such as marketing and advertising, which will help to bring in more revenue.
Many people are of the opinion that taking a loan might hamper the growth of your business and put it at unnecessary risk. It is true that there may be risk involved but it all depends on how you plan to use the funds and the controls you put in place to help keep risk at a reasonable level. Sometimes, taking a business loan can help bridge the financial gap between your business and growth and help you scale it.
Myth 5: Small Businesses Cannot Apply For Larger Loans
I’m sorry what? Kick that thought away, please! Business owners should demand the exact money they need to grow their business. However, if you are a small business looking to apply for a larger sum of money, you will need to show that you will be able to pay the loan back. With this in mind, you should have evidence ready to confirm to your lender that you are in a sound position financially to pay back the loan, you should be aware that your personal credit rating will be taken into account during the application process. It is very important to consider certain factors before applying for a loan like why you need the loan, tenure, repayment ability, cash flow, etc.
In conclusion, I believe some of your misconceptions about getting a business loan have been cleared. Now that you know the facts, if you need a business loan, get it!
How To Get A Business Loan
When I say loans, you say Oze! Loans! Oze! At Oze, we take out the hassle of searching for the right loan partner and our process is easy and seamless, plus your loan could get approved within 24 hours! We also educate all our customers on how to grow and sustain their business and we offer the lowest interest rates in the market!
You can apply for a loan via the Oze Business App. It is very important to log all your transactions(sales and expenses) in the app as it is crucial for your loan application. You can log your previous transactions in the last 30 days in the app as well to increase your eligibility, it is totally understandable that oversights happen.
If you are still unsure, please reach out to me at coach@getoze.com, a dedicated business lending coach will reach out to you to discuss the best way forward!