The web is making it easier than ever for small businesses to find alternative sources for funding. Today’s generation of business owners and entrepreneurs have an upper hand over those who came before them because they have a much greater access to information at the palm of their hands. With so much information on business funding within a arms reach it is easy to get flooded with a lot of misinformation as well which is how myths are created. This could lead to misconceptions about eligibility for business funding. Luckily here are some myths we can clear up below.
If loan amount is too small you won’t get funded
Before small business owners and entrepreneurs had a much difficult time raising capital for funding amounts that were considered too small for larger banks to consider. Left with no other options business owners had to resort to using high interest business credit cards as a means of growing their business. This is where microloans come in which were started in 1992 and has seen significant growth over the years. The microloan programs were geared especially towards entrepreneurs who wanted smaller loan amounts. The maximum borrowing cost for microloans are $50,000 with the average being $13,000 and some establishments offering as little as $500.
Start-ups don’t qualify for business funding
Getting the capital to start your new business can be a tricky situation to overcome. Many new business owners believe that they need to be in business for awhile and have good credit if they want to qualify for funding from banks and so some turn to seeking funding from angel investors and venture capitalist. However many funders are providing financing specifically for start-ups with little to no business credit history required. Start-up funding however have more unfavorable rates and your personal credit history is included in determining whether you qualify for one or not though they’re one of the best options you can take as a new business just starting out.
You need perfect credit
When it comes to securing funding for business funding, car note or a mortgage it is true that your credit history does matter a lot however there is a way around this. A credit score of less than 600 is considered poor credit but if you take the time to improve it and give an explanation as to why those irregularities exist you can still be considered to get funding. There are other factors that are taken into consideration too such as the age of the business and it’s yearly revenue but even funders know some of those factors are not the perfect way to assess how capable someone is of repaying the amount they borrowed. If you can offer other collateral assets like property you may own and can show areas in which your business is strong in some funders would ignore your poor credit.
Getting approved for funding takes forever
Many people will tell you that getting approved to receive funding can take as long as weeks or months however what those same people may not tell you is that through the use of online applications the time it will take to be approved can take as little as a couple of days or even a week. Online applications save your business a lot of time as they can take just an hour to complete and approvals in as little as 2 days to get. Sometimes though it might take a little extra time for the funders to collect important financial documents like bank statements and past balance sheets from business owners but the process is hardly slow and one extra perk to all of this is no more mountains paper work you’d have to complete.
Making heavy monthly payments is a requirement
With regular funding terms a business is required to repay the same amount regardless of their current financial circumstances which is a problem for some businesses especially for businesses that operate under seasonal conditions since their sales revenue can fall at a certain point in the year. Luckily though there are alternative funding options like cash advances which allow you to repay a fixed percentage every month that adjusts base on your sales revenue and has much more flexible stipulations. This way during periods of high sales they can repay off most of the amounts they owe. Short-term funding is another option that allows you to make daily payments in a brief period of time usually 3 months.
There is a lot to consider when it comes to which type of funding is right for you but it’s important that you find what can work for you and your business financially speaking. Business financing can be tough to get and though most business funders have strict terms when it comes to lending some offer more flexible options. Don’t let some of these myths get in the way of you finding funding for your business but always keep looking for other sources or take referrals from others who can help you out the best. There is always another way you can turn to when your business needs help.