Obtaining business financing may seem like hard work, especially when there are so many other aspects of business management to think about. With any type of loan or line of credit, there is obviously a process in place, but there are some myths out there when it comes to applying and qualifying, and also what types of financing are available. Consider a few myths that may prohibit businesses from applying for financing. 
- Obtaining business financing is complicated – Complications often arise when there is a lack of preparation. The details matter! Educating yourself on what is required will certainly help alleviate the frustration. If you know what the lender is looking for, you can gather the documents ahead of time and not feel overwhelmed by the process. Some alternative financing options require only a small amount of documentation and the process can be simple and quick.
- The bank is the only viable, safe option to obtain a loan – The bank can definitely be a viable safe way to obtain a loan, but there are many other forms of safe funding possibilities, as well as alternative financing options. Of course, it is important to ask the right questions of any lending facility to confirm their reputation in the marketplace. The bank is a great option for many businesses that are looking for large sums over an extended period of time. In some cases, however, alternative forms of finance may actually work better for your business, dependent upon your industry or specific needs.
- My credit is bad so I cannot obtain financing for my business – While bad credit may affect your ability to obtain a loan from a traditional source, where proven financial history is the most important qualifying factor, there are many financing options that concentrate on the financial reality of your business today, taking cash flow and current business performance into consideration. Bad personal or business credit does not need to stop your company from obtaining financing.
- I have been in business for less than a year so I will not qualify for any type of financing – Startup companies or those businesses with a short history may find themselves precluded from certain forms of financing, but there are solutions available. By no means should it stop your business from considering other funding sources. Alternative financing solutions often cater to specific industries, and can help you find the best options for your specific requirements.
- Alternative business financing is an expensive option – Some forms of alternative business financing can be more expensive than funding from the bank, but consider the alternative. If bank funding is not available, but an alternative source is, this could still be more cost effective than turning down business because your cash flow cannot sustain your business requirements.
- I will be turned down if I ask for the loan amount I need – It is important to assess exactly how much money it is that you need to grow your business, and also how much money you can afford when it comes to paying back the loan amount. If you are actually asking for the money you need and have informed expectations you should be able to find a financing solution that works for you. Unrealistic expectations will prohibit most forms of both traditional and alternative financing.
There are alternative financing solutions that can help put all the parts together to find the solution that works. There are companies prepared to work with you to help find the best answer and have extensive knowledge of your problems. In many cases, there is a solution out there that will work for your business. Don’t let the business financing myths stand in your way.
