Approaching a business finance broker is a smart choice when firms require a loan. Whether it’s necessary to help them expand, secure new equipment or just cashflow, businesses loans from finance brokers can support many different aims.
However, many myths surround business loans and finance providers that mislead enterprises and hinder applications. In this blog, we’ll debunk common business loan and finance broker myths in circulation to help firms in need of funding make an informed decision when using them.
Finance brokers are an expensive option
Perhaps the most common myth is that finance brokers are more expensive than directly dealing with a lender. However, brokers can often access a wider range of finance products and lenders. This helps businesses choose from a broader selection of terms and rates. Broker fees are typically offset by the significant savings companies make through securing the correct finance product. Brokers also save borrowers stress, time and effort as well as savings as they solve problems and manage the lending process.
Finance brokers only provide limited options
Many business owners mistakenly believe finance brokers just work with a small selection of lenders, and they won’t be offered the best loan options. However, many reputable brokers have built lasting relationships with lenders like challenger banks, alternative lenders and major banks. This broader market access lets them provide more tailored lending options to borrowers.
Finance brokers just work with larger businesses
Owners of small-to-medium enterprises (SMEs) erroneously think that finance brokers only offer funding options for bigger businesses. The reality is that brokers will work with firms of all shapes and sizes with their financing requirements. For instance, at AJL Finance we work with multiple SMEs helping them secure suitable products.
Finance brokers are unnecessary
Some borrowers think that finance brokers aren’t needed as they can apply directly to lenders. In fact, brokers enjoy access to intermediary-only lenders that typically offer a greater range of options and rates. They also have advantageous expertise on structuring loan applications, increasing the likelihood of success.
Finance brokers are just for firms with bad credit
Many businesses are under the false impression that brokers are only for enterprise owners with poor credit ratings, struggling to secure finance. However, brokers assist a wide range of borrowers with different credit histories from perfect scores to those with lower ratings. They help businesses understand options available and find lenders that will work with their financial circumstances.
Interest rates on business loans are too high
The most widespread myth regarding business loans is that borrowers face high interest rates. In truth, rates involved vary substantially for individual business, and loan types depend on multiple factors. These include the borrower’s credit score and history, the firm’s overall financial health and the kind of finance product being sought.
Business loans have too many requirements and restrictions
Another common myth is that business loans often have too many strings attached. Although lenders will always have set terms and conditions, businesses often discover that the flexibility provides in how they can use the finding can outweigh the perceived restrictions. Reputable lenders will be transparent regarding their terms and fees to ensure businesses understand the total cost of borrowing.
Business loans take too long to be approved
Companies in need of money in a rush erroneously believe that the process of being approved for a business loan takes too long. However, this isn’t the case. At AJL Finance, we offer decisions on applications within 48 hours. If successful, borrowers can access funds within 48 hours.
Lenders reject applications immediately
A popular myth is that lenders automatically reject applications for business loans. In fact, lenders look at multiple factors, like credit history, the financial health of the business and its ability to make repayments before approving loans. Sometimes applications may be initially rejected, but after addressing specific concerns or considering alternative finance options, a suitable finance product can often be found.
Borrowers get refused for asking for too much money
Many businesses feel they must ask for a lower sum, as requesting too much will result in rejection. This is not true as lenders assess applications on several factors, not only the amount borrowers ask for. They will evaluate the purpose of the loan, whether a business can repay it and the overall financial health of the company. A reasonable request that is aligned with a business’s needs and supported by solid financials is always likelier to get approved.
Business loans are just for businesses struggling
Finally, it’s false that loans are only designed for struggling businesses. Today, business loans help enterprises with a wide range plans including growth, expansion and technological development.
To discuss the best business loan for your firm’s financial needs, contact our team at AJL Finance today.
