3 Limiting Myths About Small Business Loans Dismantled
It’s true that the rules have changed for obtaining small business loans. As banks have become more gun-shy about lending to small businesses, it has become harder to get startup funding. But don’t despair, when one door closes another opens.
The following article by Sam Hodges on Entrepreneur.com describes how alternative modes of securing financing are emerging. This list attempts to destroy the gloomy myths that have developed in recent years about small business financing.
Myth 1: Your credit score must be perfect.
Thanks to big data and the expansion of the Internet, lenders have much more information on their hands than just your FICO score. Everything from your realtime cash flow to Yelp reviews is fair game, Hodges says.
Using multiple information sources helps round out a total picture of your creditworthiness, beyond just one factor.
Myth 2: Your loan application will be processed by a robot.
While lenders have incorporated sophisticated tools to help interpret data, there is still human involvement in the decision-making. Hodges says you should actively seek out a lender with “real people available to discuss your ambitions and loan options.”
You can leverage the human influence in the evaluation process by appealing to those individuals. Demonstrate how driven and informed you are about the strength of your business model. They will be influenced by the confidence you have in your ability to repay the loan.
Myth 3: It takes forever to get a business loan.
While this may be true when you go the traditional bank route, there are some new lenders on the scene who turn around funds for small businesses in as little as two weeks.
To read the original article in its entirety, please visit Entrepreneur.com.