“You don’t need a loan if your company’s doing well.” It’s one of those long-held misconceptions about money and corporate management.
Yet like many myths surrounding business financing options, it’s completely untrue. In fact, healthy organizations of all shapes and sizes rely on loans and other financing vehicles.
It’s not just the startup entrepreneur who comes to a lender, either. Legacy Fortune 500 CEOs and CFOs understand that getting loans makes sense.
If you’ve been told that the only way to handle your small business finance arrangements is with the cash you have on hand, you deserve to know the facts about borrowing. Below are three big mistaken beliefs about how to finance a business that should be put to rest once and for all.
Myth #1: Getting business loan approval takes weeks — or longer.
Truth: PEAC Solutions can approve some loans on the same day.
Years ago, this myth was true. It could take months to get approval for business finance loans. Why? No one had the benefit of the internet. Submissions were all paper-based and evaluated by employees. Today, the process is much, much faster thanks to paperless digital solutions and software.
For instance, PEAC Solutions’ working capital loans and equipment leasing products can take about two days from application to approval. In fact, the application process itself usually takes only a few minutes. Often, we’re able to make decisions in 48 hours and have money in approved customers’ accounts almost immediately. For business equipment financing, we make sure cash is sent within 24 hours to the dealer so you can have your new items up and running sooner.
This isn’t to say that you shouldn’t do a little legwork beforehand. You’ll want to ensure that you have the necessary documentation on hand, such as bank statements, your business plan, and other financial information. But if you’re organized, you shouldn’t have any problem finding what you need — and submitting your request with a few clicks.
Myth #2: Business owners with subpar credit can’t get business finance loans.
Truth: Credit isn’t the only determining factor in loan approval.
To be clear, you should try to keep your personal and business credit scores up. That’s just a smart practice. For instance, you’ll want to keep track of your credit score and know what’s on your credit report. However, bad credit happens, and lenders know that. They also know that a lower credit rating doesn’t necessarily make you a terrible financing risk.
Though you might have more limited funding vehicles if you have subpar credit, you might find a lender open to working with you. You may have to make a tradeoff, of course. For example, many lenders will approve bad credit business loans on the condition of a higher interest rate. Similarly, you may be limited to the amount of money you can borrow at one time.
There are still options available if you’re trying to build your credit. However, you should take steps to improve your credit score before applying. Ensure your debt payments are made on time and check your credit report for errors. If there’s a mistake, you can contact the agency to correct it.
Myth #3: Only businesses that are in trouble need loans.
Truth: Loans are a tool used by all kinds of businesses.
This misconception remains one of the biggest reasons corporate leaders don’t speak with finance business partners. They worry that by getting a loan, they’re somehow admitting that their company isn’t doing well. Yet plenty of strong businesses rely on occasional loans for a variety of reasons.
As an example, businesses with seasonal fluctuations can bridge inventory gaps with working capital loans. And businesses that land big contracts that necessitate the purchase of upgraded machinery may borrow using equipment financing. Truly, loans can be useful in so many ways for an organization that’s doing well or focused on growth.
Think of it this way: When you replace your beat-up sedan with a newer model, you probably think nothing of taking out a car loan. After all, the car loan allows you to get on the road in a safer, more energy-efficient vehicle. The same principle holds true when you leverage small business financing options. You’re making sure you keep a store of cash in the bank while still being able to take advantage of opportunities.
It’s time to start thinking of business financing in a different, positive light. Explore PEAC Solutions’ wide range of corporate lending solutions for your company by contacting our team today.