3 Myths about Business Loan
A business loan can be extremely helpful for small, medium and large businesses. It is a kind of unsecured credit that is offered by banks and Non-Banking Financial Companies (NBFCs), to help meet the different needs of a business like everyday expenses, capital purchase costs, raw material costs, marketing expenses and more.
The interest rate of a business loan depends on many factors like the size of the business, its revenue, its profitability and other such aspects. However, there are many myths about business loans that have created quite a bit of misconception among aspiring entrepreneurs who want to kick start their own businesses. So, if you are one such entrepreneur keen on taking your business to the next level, you can apply for a small business loan online. But before you do that, let’s clear up some myths about business loans for you.
Myth 1: You Need a Business Loan Only for Big Expenses
Your business may have many big-ticket expenses like the purchase of new machinery and equipment. Simultaneously, there may also be many small cash requirements, such as payments of salary to the staff, meeting the everyday expenses of your business and purchase of raw materials. You can apply for a small business loan online to meet any of these needs, be they big or small. It is not necessary to have big expenses to avail a loan.
Myth 2: You Must Offer Collateral to Avail a Business Loan
Sure, offering collateral may help bring down the interest rate of a business loan. But having to offer collateral for a business loan can be quite intimidating for small-time borrowers. This is because the asset offered as collateral will be tied up till the loan is repaid The good news is that there are many kinds of business loans that do not need any collateral – particularly for small business owners who are borrowing funds. So, if you want to apply for a small business loan online, you may be able to do so without the added burden of providing collateral.
Myth 3: There is Only One Kind Of Business Loan
The truth is, there are several different kinds of business loans, each with its own benefits and purposes. Term loans are the most common, and they need to be repaid over a longer tenure. Working capital loans help small businesses and large entities meet the shortages in day-to-day cash flows. Then, you have equipment financing specifically for the purchase of machinery and equipment and overdraft facilities that are provided against securities or collaterals like fixed deposits. The interest rate of a business loan and the other particulars of the borrowing vary from one loan to another.
This clears up some of the most common myths about business loans. Now that you have more clarity, you can apply for a small business loan online if you need to. Remember to compare the different factors like the repayment tenure and the interest rates of a business loan before borrowing the funds. That way, you can get the best offer available in the market.
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