Around twenty percent of all small businesses fail in their first year. The main reason is lack of capital, poor advertising, inadequate marketing, and weak differentiation. Unfortunately, many small businesses cannot access the financing opportunities they need due to banks’ tight requirements. According to recent data, the approval rate for small business loans at major banks is barely above ten percent.

Another issue small businesses face is the lack of information about the various options available to them regarding financing their business. This is why they must understand the myths about small business finances. In this article, we’ll debunk some common misconceptions so you can make an informed decision when choosing a loan for your business.

Myth: Debt = Danger

It’s tempting to think that small business debt is dangerous for your business. However, this is not the case. Some successful businesses that generate a lot of revenue choose to take on debt to fund their operations. It can be beneficial for their company as it allows them to expand their scope of operations and hire more talent. It can also help them develop new ideas and improve their marketing.

One of the most critical factors businesses should consider when taking out small business debt is their goal. Will taking on this debt increase their odds of reaching the goal?

Myth: Obtaining Loans Is Impossible

You might be hesitant to take out a loan due to the lengthy process involved. Even though you need the funds immediately, you might not want to waste your time and effort on an application that will only take a couple of weeks.

The good news is that there are many more options for financing your business. Technological innovations have made it easier for small businesses to get loans. In addition, the rise of online application forms has helped decrease wait times.

Myth: Only Banks Can Safely Fund a Business

Due to the increasing number of options, the competitive landscape has become more intense. This means it has become easier for small businesses to borrow money. These alternative lenders, such as crowdfunding platforms, online lenders, and marketplaces, have faster approval ratings and lower processing times.

Although the exact requirements for a loan are still the same, alternative lenders can still provide you with a lower interest rate and better terms than traditional banks. In addition, they can sometimes help you raise funds through crowdfunding.