The myths associated with private lending are countless and varied. When you apply for a loan to a lender, you will encounter many myths. The most prevalent is the misconception that getting loan approval is extremely difficult. You can obtain funding much easier and faster than traditional bank loans.
Therefore, you can see that there are many misconceptions regarding it. That is why before you think and get confused about these, you should learn the truths associated with these myths. To help you with this, below, we have debunked the common misunderstandings about loan applications to the top private lenders in Australia.
Myth: You need to have a specific business for qualification
Sometimes you might come across this misconception. The truth is that business loan lenders never consider your business type as loan qualification criteria. They only look at your cash flow history, brand value, profit, loss statement, and other financial reports. Therefore, you can apply for funding irrespective of the type of your business.
Myth: Banks are the sole lenders of business loan
Many business owners often assume that traditional banks are the only option to offer business loans. It is true that many years ago, banks monopolized the loan sector. However, you will find many second mortgage lenders who will give you a decent amount of capital for your business. Therefore, never think of this misconception, and if your business needs quick cash, you can go to a trusted lender to get the funding.
Myth: The loan application process is time-consuming
Long gone are the days when you need to wait for a few months to acquire loan approval. With so many lenders available, the loan application process is fast in today’s world.
You cannot believe that you will obtain business loans within 24 hours after applying. On top of the process is streamlined and hassle free. If you have equity in real estate assets then you are almost certain to be approved.
Myth: Private lenders are loan sharks
It is a prevalent misconception among many borrowers. The fact is private lenders are successful and experienced business professionals. They always want to invest their money in loans. But you have to look for a reputable lender to prove this myth wrong.
Myth: You cannot select the borrowing amount
Many people have this misconception that they cannot choose the borrowing amount when applying for a loan. But the fact is anyone can select and determine the amount. It is beneficial as when you know how much capital you require, you can acquire the right amount for your business.
Myth: You need to submit a lot of papers
One of the prevalent myths about loan applications is this. Due to this misunderstanding, many people often think twice before applying. However, many private lenders allow you to apply for funding online. Hence, it is a myth because you can submit the documents electronically without wasting valuable time. You can send additional copies if your lender requests any.
Myth: You need to have an outstanding credit score
Though credit score plays a dominant role in the loan approval process, you do not need to include a credit rating for qualifying for the loan. A credit score records your expenses and loan repayment data. As far as you have not missed your repayment, you have a decent rating. But if you have a poor credit score, you will get many secured lenders who will give you the funding by considering other factors. Therefore, overlook this myth as you will get funds whether you have a good or bad credit score.
Myth: Collateral is a must to get the money
Again it is a common myth. You do not need to offer any collateral when applying for a business loan. But you will get a lower amount, and the lenders also demand a high-interest rate if you do not give them any security. Unsecured lenders are available to provide funding for businesses based on their business turnover figures.
Myth: You cannot get funds if you have any existing loan
During the application process, many borrowers assume they cannot get another loan due to an existing loan. But some private lenders consider your monthly income and loan repayment history to approve your application. Thus, if you have an existing loan with adequate income and repayment capacity, you can acquire a new loan with ease.
Myth: Private lenders demand high-interest rates
Many people believe this myth, and as a result, they never go to a private lender for funding. But, this is not always the case. In many scenarios, lenders determine the interest rates based on the borrower’s repayment capacity and credit history. Besides, they also check whether you have any assets or collateral to offer or not. So, if you do not have an adequate repayment capacity and properties to give, they will naturally demand a higher interest rate. On the contrary, if you have a decent credit score and repayment capacity, you will obtain the capital at an affordable rate. Thus, it is also a myth for several borrowers.
Final Verdict
So, these are some prevalent myths or misconceptions about loan applications to lenders. By considering the above truths, you can see that the loan application process is not tricky, as you can submit the papers online. You can also select your required amount and get it without offering any assets. It is always a good idea to research each and every lender to learn about their lending criteria, private lenders offer hassle free finance with minimal paperwork.