A business loan for all its difficulties and aura is an essential part of any enterprise. Well, business loans are required for a myriad number of reasons, be it for operations or expansion of the organisation. Numerous financial organisations have set up facilities to provide the same. However, it is pertinent for the receiver of the loan to be aware of all the financial obligations attached to a loan. There are also a few myths that he or she needs to ignore.
Here are the top 6 business loan myths that one should ignore.
Myth 1 - The Perfect Credit Myth
Nature was never and neither was its creation. It is the imperfectness that makes the world a beautiful place. It is similar to a credit score. The expectation is to have one but that rarely comes across. Please remember. There is a vast difference between a good credit score and a perfect one and the latter is generally a rarity. While it pays to have a good credit score, it is all right to have a bit less than a great one. Squeaky clean credit scores don’t often appear at the financier’s desk. It also depends on the kind of loan one is looking for.
Myth 2- An only obscene amount of money is approved
Now, this couldn’t be farthest from the truth. Banks and credit companies have a lower and an upper threshold. Any amount between these ranges is allowed as a loan. The lower amounts differ but they are there for the taking. Loans as low as $500 are disbursed too, so if there is information regarding only larger amounts being allowed as a business loan, ignore it.
Myth 3- It is near impossible to secure a business loan
Commercial loans work based on liquidity capacity, the same as that of personal loans. The only difference between a business and a personal loan is generally the amount. However, the checks that financial institutions undertake to ratify the loan is standard. Any organisation with a good credit score can vouch for how easy it is to get a commercial loan. For those with less than good credit scores can still secure a business loan but the terms and conditions would differ.
Myth 4-Never avail of an online loan
In a world so engrossed in ecommerce, it is simply laughable that something of this sort would even come up. Numerous portals help loan seekers with loan comparisons. The online loan world is highly competitive and the best deals can only be cracked here.
Myth 5- All loans are the same
Well, sure they are the same if you are considering the objective. But every financial organisation comes up with attractive offers to entice customers. Hence, no loan would be the same. Interest rates vary so does the stringency of the clauses. The important part of the loan is the research and that has to be thorough.
Myth 6- The big favours the small
CGTMSE loans aren’t just provided by big financial entities but also by plenty of NBFCs too. The size of the organisation doesn’t matter but their service does.
Final Words
Business loan myths keep flying throughout the ages. It is the prerogative of the loan seeker to understand the real from the myths.
FAQs
What is the minimum credit score for a business loan?
700-750: Business loan providers mostly consider a credit score that ranges somewhere between 700-750
Who is eligible under CGTMSE scheme?
Under the CGTMSE scheme, the lending institution or NBFC, which lends money to the MSME industry are considered eligible for a maximum credit limit of Rs. 2 crores.
Can MSME loan be applied online?
Yes, some of the leading NBFCs, like Ziploan have made an easy online application for businesses to easily apply for MSME loan. You can also avail the same via Ziploan loan app.
What can increase my chance of getting a start-up business loan?
Drafting a solid business plan with a detailed strategy and future plan can increase your chances of getting a business loan approved
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