Small business entrepreneurship will always be one of the most challenging endeavors you can undertake. This is particularly true in today’s competitive global economy, where easy business loans are seemingly harder to come by than ever before. In this economic climate, every advantage helps, and misinformation can quickly derail a promising company. That’s why we’re debunking five of the most common myths about modern small business lending:
1. Small Business Lending has Rebounded – Many people believe that small business lending is back to pre-recession levels, but the Wall Street Journal recently pointed out what should come as no surprise to small business leaders, loans of $1 million or less held by banks is still down by 14% since 2008.
2. Loan Terms are Always Complex – This is a tricky one. That’s because it’s certainly true that, at most big banks and traditional lenders, loan terms seem to always be needlessly complex and confusing. However, in the world of finance, there are always exceptions, and that would include firms providing customized lending such as Advantage Capital Business Loans. These kinds of loans involve no hidden fees, prepayment penalties or other complicated matters that are typical of small business lending at other firms.
3. The Economy Doesn’t Rely on Small Businesses – This is a myth that is commonly spread by executives at large of multinational corporations who are looking to limit competition from ambitious small business leaders. Yet, a recent study co-authored by University of Chicago economist Michael Greenstone found that employment and business formation were depressed in counties with more exposure to banks that cut their small business lending, suggesting the vital economic impact of robust small businesses.
4. Financing Will Take a Month or More – Again, this myth began with a kernel of truth. At many banks, after the application, underwriting and financing is complete, several weeks might have already passed. However, innovative lenders like ACBL that are focused on small businesses provide a business loan experience that often only takes 2 to 5 days from application to financing.
When a small business professional seeks funding, it’s often due to a financial crisis that needs to be addresses as soon as possible. With a lender like ACBL, an emergency that arises on Monday can be entirely taken care of before the end of the work week.
5. Poor Credit Will Lead to Rejection – Credit history is certainly a major facet of loan approval at most lenders, but the demands of modern entrepreneurship have inspired ACBL to create an innovative lending model in which the majority of weight is put on a business’ efficiency and potential. This model helps to even the playing field between large companies and small business professionals who take on debt simply to get their companies off the ground.