Getting a loan approval for your company can seem like a daunting prospect. But, whether you’re wanting to get your business off the ground, want to expand on your existing company, or take the next step in buying a commercial property; financial aid in the form of a business loan might well be necessary to take the next step.
However, a loan approval will depend on your businesses needs and circumstances. Take a look at the most common myths busted, as we help advise you on your next steps.
Myth: You have to have a perfect credit rating
This is one of the biggest business loan myths. In actual fact you can still get a loan even if you have a bad credit rating. However, some banks and lenders may be more strict on how much they lend out and at which rate, meaning that you could end up paying a higher interest rate to reflect the fact you’re seen as a riskier prospect.
Myth: Only start-ups can get a loan
There are many reasons why you might need an injection of cash – not just because you’re launching into the market for the first time. There are lots of different business loans available to you – as this guide demonstrates – but some will have different stipulations on who can apply. Bridging loans, for example, aim to support property investors and commercial mortgage holders to expand by supporting them while they’re awaiting the sale of one property. Tax loans, meanwhile, help businesses to stay within the law by spreading the repayments on a more manageable monthly plan.
Myth: Banks are the only place to go
There are more places available to help you get a business loan than there used to be. Traditional financial institutions are still reliable, but it’s no secret that it can be tough to get approval for the investment you need. This is why more and more business are choosing other options to source their finances. From crowdfunding and peer to peer lending to government funded grants or private investors; there are alternative routes to consider if you’ve been turned down by a bank.
Myth: There’s a limit on how much you can borrow
There’s not a limit on how much a business holder can borrow. However the amount you can access will depend on your circumstances and the requirement of the lender. You might find that you face a higher interest rate for borrowing a smaller amount (although that doesn’t mean you should get sucked into trying to borrow more than you need) and it’s important to factor in the interest that you’ll pay.
Myth: Getting a loan can take forever
As no business is the same, it can be hard to say how long the loan process will take. But, there are factors that can speed up the process. If you have a good credit score, have all your documentation to hand and you have a sound business plan with data-driven projections this will make you a better proposition.