It is easy to fund your business with the borrowed money but don’t fall victim to the Business Loan Myths. Learn more about them before applying for Business Loans. Thinking about the Good and Bad side of a Business Loan? Or may be anxious about the implications? Or maybe you are not so familiar with the process involved in the business Loan? If you are willing to increase your business, improve your cash flow, buy supply, need to invest in office space or simply wish to consolidate your business debts, then choosing Business Loan is probably the best option available for you. Below are some Business Loan Myths and facts to consider before applying for a business loan:
Myth 1 – A Personal loan is a better choice than a Business Loan
Personal Loan is one of the most expensive products that Banks or NBFCs are selling these days. When you compare a business loan with a personal loan, you will find out that Business Loan comes lighter on your pocket in terms of repayment. Depending on your Cibil Score, personal loans can come with interest rates up to 30% P.A. The only advantage with a Personal Loan is that you are free to use the loan amount in whatever purpose you have. But as a loan applicant you should always consider about the higher cost of the loan. Also, keep it in mind that a business loan can be eligible for a tax benefits.
Myth 2 – Use your savings instead of taking a business Loan
It is not suggested to use your personal savings to improve your business. If some mishaps occur and your business fails then at least you should have your personal savings to survive the odd times. If you use personal savings then in emergencies, you will have to borrow money and this time with higher interest rate to finance your living expenses.
Myth 3 – Your Personal Credit Score will not impact your business loan application
While checking your business loan application, Banks look on health of your business. But still the personal credit history also plays its part. With your personal credit score, banks analyses your financial behavior. Any person with a good Credit score have higher chances of getting their business loan approved and with lower interest rates.
Myth 4 – It’s Very hard to get a Business Loan
Well this statement is true for only those who have a bad financial background and personal credit score. If you had responsibly managed your financials in past, have a good business and a good credit score, then getting business loans is easy for you as your profile is already strong. You might not need to submit much documentations and a strong profile also give you benefits in terms of interest rates.
Myth 5 – Big Banks are best for Business Loans
It’s a total myth that people usually believe. You should never skip any option when you are choosing among different banks whether they are small or large. Don’t follow someone else’s words, compare the Banks, read their public reviews and product reviews, services and other associated details to understand more about the bank. You might be surprised that there are several options and advantages that are offered by different banks who themselves are competitor of each other. Do not under estimate a local NBFC as they might also offer you an excellent terms (better than a big bank) on their Business Loan Product. You can also check out for business loan with your PSU Bank and actually get a simpler loan approval process. There are always new Banks and financial organizations coming in market with their lucrative plans and few of them actually are good to go for a business loan. Make a smart move and choose it wisely.
As these all Business Loan myths are now busted, you can clearly understand the picture. If you wish any further assistance then feel free to contact Banknomics and we will help you getting your desired Business Loan with the best possible plans and offers.