Nowadays, business owners can select from a wide range of lending solutions to help them meet their needs. Still, without the proper guidance and education about what they entail, a much-needed injection of capital could become a financial headache. For example, term loans are an effective solution for business owners who need capital to help support growth opportunities outside normal operating expenses. Term loans, structured to be repaid over a specific timeframe, are often used to invest in assets that will increase topline revenue and ultimately lead to an increase in profitability. However, whether from a bad experience or poor service, like many lending solutions, there are some myths about them. We’ll explain the common hesitations you may have about term loans for your business and why they may be a better solution than you thought.
Myth #1 The Application and Funding Process Takes Too Long
When you need cash fast, a ton of paperwork and back-and-forth with a loan officer can be discouraging. However, many alternative lenders focus on speed and efficiency to cater to small businesses’ needs, so the application and funding process for a term loan can be relatively straightforward. At Primary, we can review your application, credit history, and company’s financial position and provide funding for qualified requests within a matter of days.
Myth #2 Term Loans Are Expensive
While every financial situation is different, that doesn’t mean every alternative term loan will be more expensive than a traditional one. The cost depends on the loan amount, repayment terms, interest rate, and associated fees. Term loans can get costly if you borrow more than you need, miss hidden fees, or agree to unsuitable repayment terms. Reputable alternative lenders strive to be transparent and should be willing to answer your questions and provide a breakdown of all associated costs. While many factors determine the loan’s details, our team will work with you to decide the appropriate amount to borrow for your needs and create flexible repayment terms that align with your revenue generation, so you can grow, continue operating, and have some financial breathing room.
Myth #3 I’ll Never Qualify for a Term Loan
Alternative financing provides a path for business owners who may not fit into the traditional financing profile. If banks have denied you through the traditional route, an alternative term loan may give you the opportunity you’re looking for. At Primary, we review several factors other than credit scores when helping business owners secure the capital they need. For example, we will look at projected revenue growth and other unique situations, such as an incoming grant, to help us better understand your company’s potential and how we can best serve you today.
Myth #4 Terms Loans Will Worsen My Credit
Terms loans are another opportunity to demonstrate your creditworthiness in a timeframe that meets your needs. For example, you don’t necessarily have to commit to a long-term loan when a shorter-term loan may better suit your situation. A history of responsible borrowing and repayment can help you build a stronger credit profile. However, it’s crucial to choose a reputable lender and ensure you can comfortably manage the loan payments to avoid any negative impact on your credit. That’s why at Primary, we’re committed to educating our clients with full transparency of the loan’s details, fees, and repayment obligations.
Myth #5 A One-Size-Fits-All Solution Won’t Fit My Situation
Alternative lenders understand businesses have diverse financing needs and offer various financing options to cater to them. Term loans from an alternative lender often come with flexibility in loan amounts, repayment terms, and interest rates. At Primary, we consider factors such as cash flow, business performance, and industry-specific circumstances. This allows us to tailor loan solutions to meet your business’s specific requirements and find a term loan that aligns with your unique situation and goals.
Okay, we’ve debunked these myths. However, it’s still essential to conduct thorough research, carefully review loan terms, and fully understand the implications of taking on a term loan from any lender. Contact our team today if you’d like to start a conversation about how a term loan or other alternative lending solution may assist with your capital needs.