Some things are understandable as myths. The Loch Ness monster, the fountain of youth…small business financing doesn’t belong on this list.
Unfortunately, a lot of myths exist related to small business financing. At Qualifi , we strive for absolute customer transparency, which means we’re here to debunk some of these common myths that clients contact us about.
1. “I only need outside funding when my business is doing poorly.”
Totally false. Many businesses that we work with are doing great financially, but they need an extra stream of income for a product launch, or they want to have more working capital to put behind their business in case things DO start to look bleak. Is it common that floundering business owners look for outside funding in order to save the business? Yes — but that is far from the only situation that requires outside financing.
2. “Small business financing is a long, arduous process.”
With some entities this is the case, but it’s not how things have to be. Qualifi has shortened the application and approval office so you’re never waiting a long time to hear back about approval OR to receive the capital you’re asking for. We skip out on superfluous paperwork, work with digital signing when possible and streamline the application process so you have results and capital as quickly as possible.
3. “My credit isn’t good enough for financing.”
This isn’t the case. At Qualifi , we can help most people who have fair, or even poor, credit scores. It used to be that perfect credit was needed for business financing, but not anymore. The guidelines have been lessened, and more financial entities are willing to look past credit scores and use other methods in order to assess approval qualifications.
4. “Banks are your best source of small business funding.”
This is certainly not true. Financing through a bank can sometimes be a breeze, but oftentimes this process is very long and involved. When you apply for financing with a bank, understand that their approval guidelines are often very strict, and getting your money once you are approved can be an ordeal. Bank funding may come with low interest rates, but many turn away non-established businesses because they appear to provide too great a liability.
5. “Small business financing comes with way too much debt.”
Of course loans and credit lines come with debt and interest rates — there’s absolutely no denying that, and we’ll never tell a client that their money is somehow magically free. However, small business owners are often scared of debt because they’re been told it’s unnatural or abnormal. This is part of the business process, and it’s rare that they’ll somehow receive cash backing through other means. As long as a repayment plan is in place, this debt shouldn’t be a problem.
6. “I need so much money that you’ll turn me down.”
It’s not abnormal that you’ll need a large sum of cash for your business — that’s fine with us! We advise that you don’t ask for more money than you need from any financial institution, but don’t be afraid to ask for a large amount of capital. If that’s what you need, it’s what you need. We’ve built relationships with financial lenders who are more than aware you need capital in order to invest in your business properly.
Do you know of any more financing myths that should be debunked? Or do you have any questions about whether or not a common thought about financing is or isn’t a myth? Let us know!