5 misconceptions of applying and getting a business loan

Having a business can be the most fun, exciting, and profitable adventure of your life. It requires many qualities such as an open mind, a willingness to work, and above all, discipline. The key to completing the journey is to have the right information and not be guided by rumors or false information about small business loans.

According to the Oberlo platform, in the United States, there are 31.7 million small businesses and 60.6 million people have jobs because of them. Unfortunately, 20% of companies fail in their first year of operation. However, it is of little use to know the data if we do not identify the reasons to avoid mistakes and be part of the statistics.

The main reasons for the failure of small businesses are:

– Not studying the market

– Business plan problems

– Bad marketing strategy

One reason that affects a large number of companies is the lack of access to financing. The requirements for small businesses avoid them being an option to capitalize. Sometimes the amounts borrowed are low and other times they just don’t apply. 

Camino Financial, a US fintech, has helped us debunked these misconceptions about small business loans. Take note and don’t let misinformation keep you from your business dreams and goals.

1. Only banks give loans

Banks are a great source of financing, but the reality is that the number of requirements and specifications to make use of their products are excessive. You could say that they play in favor of the bank and not the entrepreneur. Fortunately, there are other financial institutions where you can rely to get credit according to your possibilities.

2. They ask for many requirements

Traditional credit channels for obtaining small business loans usually require collateral, a perfect credit score, and proof of income. It’s similar to when a student leaves college and is asked for experience to get a job, it’s impossible. Institutions such as Camino Financial offer affordable options for all types of businesses and owners.

3. Loans are for emergencies only

The best small business loans are those that will be used in projects that will bring growth to your business, either in improvements or for purchases that will generate more profits. It is also wise to use them when you need help, but always with a well-structured action plan and clear objectives to follow.

4. All types of financing are the same

This idea comes from the absence of information, personal loans are not the same as mortgage loans, small business loans, and many other financial products that are in the market. The worst mistake you can make is to use personal credit for the business or the business credit to cover mortgage debts. The reason is very simple, each one has special characteristics that allow better management of it.

5. The process is very slow

Traditionally, banking institutions take between one and two months to analyze your application, while other financial companies such as Camino Financial handle a period of two to 14 days to get the approval depending on the product you apply for.

It’s natural that financing is intimidating, usually, no one likes to take on debt, but there are good and bad debts. The good ones are those that generate more profits, growth, and help consolidate your future projects. Whether it is to solve a problem within your company or to implement better strategies. Do not hesitate to learn about all the credit options you can access.

Look for support from financial institutions, you will find staff dedicated specifically to understanding your circumstances and giving you all the advice, you need. Don’t just take one possibility, search at least five companies with different financial products, this will give you the certainty that you are getting the best deal possible.

Small business loans are financial products tailored to entrepreneurs and handle the best interest rates for a company, get to know them, and take advantage of them. Don’t let the fear of what is new or different make your business part of the number of failed companies.