What should be your credit score while securing a loan? What should be your loan amount? Allow us to dispel some of the myths we are dealing with regarding the loans for small businesses and provide you with the support you seek. Before applying for a specific loan, such as equipment loans for start-ups, read about the several myths. Some of the borrowers do not avail of the loan because of the myths.
It might seem scary to obtain a small business loan at first, but it is not as difficult as it seems or perceived. If you are new to the business, you might hear a lot of challenges about growing your business which is not only false but toxic for the growth of your business too.
Before getting into myths, you must understand something about small business loans. All loans aren’t the same. They vary by type and lender, and each one of them has its own pros and cons.
You should be clear with the misconceptions. Try to find the truth behind it before applying. Do not just go by word of mouth.
The Toxic Myths
What type of loan will suit you will depend on the nature of the business you are running, your track record, and the revenue you are earning every month. Many people borrow business loans for start-ups in Ireland.
It depends upon the suitability of the borrowers. These loans are also considered equipment loans for start-ups. You can use these loans as an entrepreneur to buy equipment for your business.
Myths about Equipment Loans for Start-Ups
As an entrepreneur, understand and analyze the false notions about the loans. This will help your business to grow.
1. Getting a Small Business Loan is Tedious, Lengthy and Frustrating
Absolutely wrong! In fact, as long as the loan amount is under a million pounds, or even better if it is below the 500K, getting a loan sanctioned is one of the easiest processes and simply takes a few days.
You just need to be transparent about your business, needs, and how you plan to use the loan amount; you have nothing to worry about while applying for credit with banks or private lenders.
In case the loan amounts are even smaller and you plan to pay it back within a month, equipment loans for start-ups are the stop solution for you. These can be applied online directly on a lender’s website without filling out any forms or other formalities.
2. Perfect Credit Score is required for getting Equipment Loans for Startups
While traditional banks would care much about your credit score, that doesn’t mean that you can’t secure a loan. There are many alternative or private lenders which do not take past credit scores into much consideration.
These lenders analyse the current financial health and reality of your business basis the current market scenario & trends, what potential your business is promising and, your area’s economic status, and other similar factors instead of your personal financial history.
So, never limit yourself to the offer you get first. There are several lenders offering cash loan in 1 hour in Ireland, you can get this loan easily. Your credentials should match your requested loan amount. If it does, there will be no hurdle in availing of such loans.
Explore, keep asking several lenders for offers and negotiate them to suit the best of your situation. Often you would stumble upon a better offer than you would have initially thought of or expected.
It is important to note that you still need credit history even if your credit score is not considered as much. A credit history differs from your bank profile and gives lenders proof that you pay back a loan.
One of the strategies to improve your credit score is to apply for a payday loan and pay it back quickly. These loans provide small amounts of money, which is enough for urgent/impending expenses such as taxes or health emergencies and since they are smaller amounts, they can be paid back within one month.
These can be taken online from a direct lender easily and helps in increasing your credit score by proofing that you can handle any payback loans.
3. Larger Amounts of Money will be rejected Out rightly
The loan amount requested does not necessarily impact your approval probability. Lenders often favour giving out big loans since they earn them more interest over time.
Banks or big lending organisations are especially hesitant in petty or small amount loans. Hence, there is no harm in applying for the money you need for your business (even large). Just assess how much you will be able to pay back periodically. Assessing loan paying back period and amount is important.
The lender will always check your cash flow statements to ensure you have enough cash flow not to disrupt your loan payback payments on schedule.
4. Securing Loans for Start-Ups is not Possible
Amongst many budding entrepreneurs, one of the common assumptions is that they need to be in business for some time to build up a credit score before applying for a loan. Not so easy if they are starting new — it is far from the truth.
The reality is that a lot of lenders are offering equipment loans for start-ups, customised specifically for businesses with little or no credit history, basically which are new in the industry.
Yes, your personal credit score will be considered. But as long as you have good standing and present a good business plan, the loan will likely get approved. Hence, always do your homework and never hesitate to ask for an expert’s help. The outcomes might surprise you.
5. Frauds are Common with Online Lending
This is not right. Just think of all the things you do online every single day like online shopping, bookings, banking etc. Does that scare you or stop you? Online loans are also no different these days.
With more and more online lenders appearing over the internet, diverse and authentic service offerings to fight the competition.
Many even offer single-digit interest rates. And they are authentic and legit. It is totally up to you to find the one that suits your needs and offers the plan that benefits you in the long run.
Taking equipment loans for start-ups is not difficult at all. What matters the most is to find the right solution for your business. And to achieve that, seek consultation from experts and explore the various offerings.
Do your research, ask as many questions as possible to the lenders before you make the commitment and do not hesitate to try something new. You can always experiment till the limit it is affordable to you.
Hudson is a graduate of banking and finance and works as a financial consultant at MyLoansBoat. He has a professional qualification to counsel people about money management. At MyLoansBoat, his key duties include shortlisting applications of borrowers and counseling them about credit score improvement, building an emergency cushion, retirement funds, and getting rid of debt. He is an ardent reader of finance books and uses the gained knowledge to help people with their finances. He also writes for the company’s blog on various topics like budgeting, investing, saving, debt management, joint finances, and the like. His aim is to dedicate his life to helping people have a debt-free life.