Elan Capital hears small business loan myths on the street all the time. Here are 5 small business loan myths – Busted.
5 Small Business Loan Myths – Busted – Elan Capital Inc.
As a small business owner, you may have have heard how difficult it is to obtain a small business loan. But don’t believe everything you hear! Here are 5 common small business loan myths.
You need nearly perfect credit to get a small business loan.
In the past, lower than perfect credit scores likely prevented you from getting a loan. The lending environment today is more open to sub-par credit ratings. While traditional banks tend to be more restrictive, Alternative Funding tends to base lending on the financial realities of a business, rather than the financial history of the owner. At Elan Capital, our lenders take a look at business performance, your industry type, cash flow and other business factors.
The more money you ask for, the less likely you’ll get it.
When talking to friends and family members, your likely to hear something along the lines of “It’s OK to ask for money, just don’t ask for too much.” While this may in fact be true for a personal loan, there is not much truth to it in the business world. Banks actually prefer lending larger amounts to businesses because there is more profit from large loans. What they are cutting back on are small loans in the $10,000 to $1 million range (smaller banks are now starting at about $250k).
The most important factor is the interest rate.
There is little doubt that it’s important to consider interest rates when choosing a lender. But there are many other factors to consider. What are the other fees? What are the terms? How soon do you need to repay the loan? What can you use the money for? How fast is the funding? There are other important factors to consider.
The best loans are from a bank.
Traditional banks have been a mainstay of small business for decades. But today, two things have happened. Traditional banks are not the only source of funding and often, they are not the best source of funding. For business owners looking to borrow small sums of $10,000 to $250,000, obtaining a bank loan is very likely to be much more trouble than it’s worth. And time is money.
If you have great personal and business credit, have been in business for years, and need to borrow a large amount of money over a long period of time, all while getting a good finance rate, it’s hard to beat. It’s also hard to get and it takes a long time to receive the funding.
New or young businesses can’t get loans.
Put another way, this myth states that a new business is locked out of funding until it build a history. There is some truth for that on the traditional bank side, but on the alternative side, new and young businesses have plenty of options.
Remember, these lenders look at factors like your industry in general. Simply put, if you are in a fast-growing industry like health care, technology, building equipment, software development, construction, trucking, information and data, and many more, a bank is more likely to limit your growth, where alternative funding can help you soar.
Elan Capital is giving banks a run for their money by working directly with small business owners. In many cases, we make the lending process more convenient, with quicker turnaround, more transparent terms, and more flexible lending criteria.
If we could put $4K to $2MM into your bank account, how would you use it?
Today, with one phone call, you can have dozens of lending sources competing for your loan.