Financing the small business is an option that
all entrepreneurs have to consider when
contemplating growing their businesses.
There are many myths about financing the
These are the top 10 myths.
1. You Need a Perfect Credit Record to
Get A Small Business Loan:
donít need a perfect credit Record in order to
obtain a small business loan.
You just need a good credit record and
demonstrate that you can repay the loan.
A Great Business Plan is
the Most Important Thing You Need for a Bank
great business plan is not the only thing you
need in order to get a bank loan.
You have to demonstrate that you can
repay the loan by demonstrating that you have a
business that is generating revenues.
You have to demonstrate that you have a
good team that can continue to execute the
business plan and make the business successful
so that they can get their money back plus
Every Financing Source
Requires Debt or Equity:
Every financing source does not require you to
take on debt or give up eqity.
If youíre able to obtain a small business
grant, you do not have to take on debt or give
up any equity in the business.
You can raise money on Crowdfunding sites
Indie Gogo, etc.) without
having to take on debt or give up equity.
Learn more about
The Easiest Source to
Finance a Small Business is the SBA:
Small Business Administration (SBA) administers
business loans provided by the federal
They do so by providing loan guarantees
to lending institutions (such as banks) that
actually make the loans.
It Takes A Long Time to
Get A Small Business Loan:
does not take very long to obtain a small
business loan from a lending institution.
An SBA backed loan can take up to a week
and other lending institutions can give you a
response within 24 hours.
If The Bank Wonít Lend
No One Else Will:
Being turned down by a bank is not the end of
Other institutions are
willing to lend to you if you meet their
Donít forget that you can also borrow
from friends and family.
You can also use
Using Personal Credit
Record will not Impact Borrowing:
Using your personal credit record instead of the
business record will have an impact on your
ability to borrow money from lending
institutions such as banks.
Asking for A Small Bank
Loan Amount Will Get Turned Down:
the bank believes that they can make a profit
from lending you the money they will lend it
regardless of the amount.
However, they may redirect you to a
different lending vehicle if you ask for a small
For example, you bank may direct you to
apply for a credit card instead, if youíre
applying for a $15,000 loan.
It cost banks the same amount to
underrite and process a $60,000 loan as it does
a $500,000 loan.
Hence, they would prefer to focus their
efforts on the bigger loan.
You Canít Start A
Business Without Borrowing Money:
You donít have to borrow money to fund
Most startups are funded by the founders
and not external lending sources.
Founders usually contribute the startup
funding to get their projects off the ground.
If there are more than one founders, each
contribute their share of the startup funding.
10. Getting A Small Business Loan is
use to be a difficult process.
In the past you had to fill out many
forms and provide a lot of information about
your business and convince a number of people in
the lending institution before a decision is
made to lend you money.
However, competition in the marketplace
from online lending sources has forced banks to
reconsider their lending practices and make it
more friendly to small businesses.
Today you can fill out a simple
application and get a quick (within 24 hours)
response from banks and other lending