Entrepreneurial Spirit & Business Loan
Entrepreneurial spirit is reaching new heights these days. In the last few years, more people are coming up with their new and innovative ideas, and are trying their luck in business. Though having a good business idea is one of the most important things needed to start a business but this is not it. Converting any particular business idea into reality is equally important when you want to exist and grow in the business. To make this happen, the second most important thing needed apart from a business idea is capital. It is the basic and the most important requirement for any business. Capital is the one which decides a business will be able to exist in the market among its competitors and will it be able to scale up?
Business loans are easily available and are one of the most convenient ways to raise capital for a business. Still, a few people don’t opt for it due to several preconceived notions. In this blog, we will be discussing those business loan notions/myths that one shouldn’t believe.
Business Loan Myths
Takes a Long Time for Loan Approval
It’s totally a myth that business loan approval takes a long time. Like any other loan, the processing of a business loan is simplified and can be completed in less time. But for a speedy approval process, a borrower needs to keep all the required documents ready and should fulfil the eligibility criteria. If all these are ready the time consumed in the approval process reduces as the lender only needs to verify the documents and check the CIBIL score.
Loan Approval for a Small Amount is Difficult
Loan approval is a strict procedure for any kind of loan, this is because lending money is risky stuff and to be at safer sight lenders have to follow strict eligibility criteria. Based on this eligibility criteria the loan amount approval for a borrower depends. It is quite obvious that one can’t lend you the amount which will be impossible for you to repay. So, it is totally a myth that loan approval for a small amount is difficult. However, there are various other factors responsible for a business loan application rejection.
Security is Obligatory
One of the most common misconceptions is that you need to give security/collateral to get a business loan. Only one out of every odd moneylender expects you to vow security for business financing. Both secured and unsecured business loans are available in the market, so you can choose one depending on your requirements and affordability. In addition, some lenders request an individual assurance for favouring a business advance without security.
Interest Rate is the Most Important Factor to be Considered
Interest rate is one of the most important factors to be considered before you borrow, however it can’t be the only important factor to be considered. Loan processing fees, pre-payment charges, late penalties are several other factors which contribute to the total borrowing cost and should be considered before you opt for the one. As your total borrowing cost is not only the interest rate but is the combination of the fees and taxes which are charged from your pocket. Hence, all these factors are important to be considered apart from the interest rate.
Higher Loan Amount is Required for Approval
It’s completely a myth that only a business loan application with a higher loan amount is approved.
The truth is your loan application approval is only dependent on your eligibility criteria and the documents which you submit. Even a smaller loan amount application can get approved if you have proper documentation and if you can fulfil the lender’s eligibility criteria.
A myth can spread faster than the truth these days. Business loans are a great help to entrepreneurs who want to convert their ideas into a successful business. So if you are willing to opt for a business financing don’t trust any persisting notion, research well online and in the market as well. Apply and experience the facts yourself.
