Myth Busting Business Loans

If you are in the process of setting up a business, you will come across the topic of business loans. The reason is simple: keeping an SME’s finances in the black isn’t easy. Lots of small companies struggle to steer clear of debt, and they need help as a result. However, any research into the topic may put you off the idea altogether. Why? Well, it’s because opinions exist that make applying for a line of credit appear like the worst thing in the world. Some of those opinions are myths, and it’s time debunk them once and for all. 

Myth: Getting A Loan Is Impossible

Yes, securing a loan isn’t as simple as walking into a bank and asking the manager for money. Because there are risks involved for both parties, there is a stringent set of rules that exist. However, this doesn’t mean that a creditor will automatically decline your application.

Myth: You Need Perfect Credit

Again, traditional lenders are reluctant to accept an application if you have bad credit. But, this reverts to the reliability issue. Still, that doesn’t mean that you have hit the end of the line. The truth is that there are plenty of options at your disposal, starting with a guarantor. Quite simply, the bank will finalize a deal if they get a signature from a person with a good credit score. In the event that you can’t pay up, the guarantor takes on responsibility. If there is no one willing to take the gamble, it is straightforward to find a bad credit lender. 

Myth: Interest Is The Most Important Factor

Interest is a crucial factor for a variety of reasons, the main being the additional payments can make the loan unaffordable. But, it isn’t the only consideration. There are plenty of things to factor in before signing on the dotted line. Asset security is a major example. Some loans are secured and others are not secured. The ones that use an asset as security are potentially dangerous because the lender can repossess it should anything go wrong. People have lost houses due to the fact they never contemplated the issue beforehand. 

Myth: Rates Are The Same

All lenders are different, and they charge different rates as a result. So, you should never assume that one loan is the same as another. If you do, there may be a nasty shock when the first repayment comes into effect. The key is to ask and be sure about the monthly rates before making a final decision. Even if it makes you seem stupid, there is nothing wrong with drilling home a point. 

After all, it is you that has to repay the money and no one else.