10 Feb 4 Common Myths About Online Lending and Small Business Loans
An informed decision is a strong decision.
Having accurate information on hand helps you make the best decision possible for your company. And considering all of the myths about online lending and small business loans, it’s in your best interest to separate fact from fiction. Let’s look at four common myths about small business loans and learn why they are just that – myths.
Myth No. 1: Online Lending Can Hurt Your Credit Score
This myth about small business loans is both discouraging and wrong. You don’t have to worry about a loan from a non-traditional lender harming your credit score. The vast majority of online lenders only do a “soft credit pull” early on in the application process, which doesn’t hurt your credit score at all.
And once you get approved for a loan, as long as you make your payments on time and eventually fulfill your end of the agreement, there’s nothing to worry about. On the contrary, Business2Community pointed out that many businesses actually see a jump in their credit score by paying back an online loan.
Don’t let this misconception hold you back from all the benefits a small business loan can provide.
Myth No. 2: You Need to Use a Business Loan Broker
Business loan brokers can be helpful for small business owners seeking out loans. That’s especially true when you have no past experience seeking out financing. A broker’s knowledge and experience can help you make your way through this process.
However, brokers don’t always steer clients toward the best loans for their individual needs. They may be more focused on larger loans as their compensation comes from a commission system and agreements with lenders. In many cases, working directly with a trustworthy lender can greatly simplify the lending process.
Using a broker can help your business in some situations. Just remember that it is by no means a requirement for getting the best loan for your needs.
Myth No. 3: Your Loan Will Involve High, Long-Term Interest Payments
Alternative loans can involve higher interest rates than a bank loan. These higher costs support lenders, allowing more businesses to access funding and helping providers quickly provide it. They also help alternative lenders offer smaller amounts than would be considered by a bank.
Another important truth that dispels this myth about small business loans: Short-term lending helps keep total interest payments low. Inc. highlighted how small businesses often lower the impact of higher rates by taking out smaller loans that are paid back over a shorter period of time.
Myth No. 4: Online Lending Is Complicated
There’s no doubt online lending is different from seeking out a loan through a bank. Having to review different options, terms, and conditions requires some extra work on your part. But that doesn’t mean it’s a complicated process. A dependable online lender will offer plenty of information upfront. And they will also share more specifics as you move through the application process.
Good lenders also always keep customer service and experience in mind. To this end, they ask for required business and financial info in a simple, direct and secure way. And the online workflow, from application to a final decision, takes significantly less time than is required when applying for a loan through a bank.
Cracking the Myths About Online Lending and Finding a Dependable Partner
Believing certain myths about small business loans is just one of many potential mistakes small business owners can make when looking or applying for a loan.
Working with a dependable lending partner can go a long way toward making this important process as simple and direct as possible. QuickBridge is here to help you work through the lending process with plenty of information, support, and guidance. To learn more, get in touch with us today.
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