6 Business Loan Myths Debunked

Business Loan Interest Rates Are Too High

Business Loans Have Too Many Strings Attached

It Takes Too Long to Get Approved For a Business Loan

Business Loans Are Too Risky

You Can't Get a Business Loan With Bad Credit

Lenders Will Reject Business Loan Enquiries Immediately

Summary

Are you considering applying for a business loan but unsure of the truth behind some of the myths you've heard?

Applying for a business loan can feel like an intimidating process, and sorting through all the information and advice online doesn't always make it easier.

At Love Finance, we want to make sure that our customers have access to accurate information when looking for a business loan. Here, we discuss several popular myths about business loans in the hope that we can put your mind at ease and help you make the most informed decisions on your financial future.

If you're unsure what to believe about the myths surrounding business loans, here are 6 common ones debunked.

Myth 1: Business Loan Interest Rates Are Too High

The interest rate the lender offers you will depend on various factors, such as your credit score, time trading, and general financial health. 

While there is no one-size-fits-all answer regarding interest rates, we offer competitive rates that could help get your company off the ground or expand existing operations without breaking the bank.

External factors (mainly high inflation due to the cost of living crisis) have caused interest rates to rise recently. However, this doesn't mean you can't get a loan with a reasonable rate. If you face a high rate due to low credit, there are things you can do to build it back up, and hopefully, you'll receive a better rate in the future.

Working with an experienced broker like Love Finance will give you the best chance of finding a deal that works for both parties, as we have several lenders we can approach.

Many people believe that business loan interest rates are too high full stop; however, the rate you receive depends on your circumstances.

Myth 2: Business Loans Come With Too Many Strings Attached

With business finance, it can feel like there's an overwhelming amount of figures to be aware of - but you don't need to be intimidated by them. 

Once you've wrapped your head around the basics, and you're confident your business is in the right place for it, you'll be ready to move forward.

Your account manager will outline anything you're unsure on, and what is expected of you and your business when taking out a loan.

Myth 3: It Takes Too Long To Get Approved For A Business Loan

Approval times will vary depending on your circumstances.

We specialise in fast business finance, with a streamlined process that allows you to be funded in a matter of hours. If you're looking for immediate finance to cover an unexpected bill, repair, or other business expense, let us know and we could get you funded in as little as 4 hours.

Approval times will also depend on your circumstances, but we are experts in fast business loan approval.

We work with an experienced panel of lenders that provide quick turnaround times to get you the funding you need when you need it.

Myth 4: Business Loans Are Too Risky

A business loan is only as risky as you make it. Responsibly managing your payments, interest rates, and other factors associated with a loan can reduce any possible risk it may pose.

You should only take out a business loan if you're confident you can repay it. This will ensure you maintain your relationship with the lender, avoid any payment penalties and keep your business in the best place possible.

Myth 5: You Can't Get A Loan With Bad Credit

Despite what many people think, bad credit does not prohibit you from obtaining a business loan. 

If you have poor credit, there are options for you, but you might have to be willing to accept slightly less desirable rates and terms.

You can get a business loan with bad credit, you might just have to accept slightly worse terms.

Also, we work with lenders who specialise in providing loans to those with less-than-perfect credit scores. We also have alternative funding options for you to consider, such as a merchant cash advance or asset finance. 

Myth 6: Lenders Will Reject Your Application Immediately

Lenders consider various factors before approving a loan, including your credit score, the size and type of loan, and how much money you can pay back. Lenders want to approve enquiries where they know the borrower can make their payments on time. If they believe you can do this, they will approve your loan.

Unfortunately, we cannot get funding for every business. If we decline you for not trading long enough or for low turnover, you can enquire with us once this has changed and we will do our best to help.

Alternatively, we can point you in the right direction of another company that can help. 

Summary

With any type of finance enquiry, your business' circumstances will impact the deal you receive. We will always try to get you approved at a rate that suits you, but if you need the funds immediately, you may have to settle for slightly worse terms.

It's important to remember that the goal of lenders is to lend money responsibly, so if your business looks healthy and you prove that you can repay the loan on time, you put yourself in the best position for funding.

Hopefully, clearing up these business loan myths will help put you in a better position to get a business loan.

Make sure you're aware of your credit score, and disclose anything that could show up on your credit report, such as any mispayments or defaults. If you are upfront about these, we can find you the most appropriate product for your request.

If you need any additional business loan advice or support, feel free to contact us during our working hours, 9 am - 5:30 pm, Monday - Friday.

Alternatively, you can visit our blog to read more about business loans and financial advice.