6 Common Business Loan Myths: Discover the Facts

In the vibrant realm of entrepreneurship, Business Loans play a pivotal role in fueling growth and expansion. However, amidst the buzz, several myths often cloud the decision-making process. Let's clear up these confusions and learn the facts about loans. This will make it easier for businesses to get the right support, opening new opportunities for success.

Myth  1: Applying Online Is a Hassle

Some people think applying for a business loan online is hard, like solving a puzzle. But it's not true! It's actually easy and saves you time. With just a few clicks, you can build on your business dreams without dealing with the burden of paperwork. Think of it like ordering your favourite pizza online – quick and simple!

Click here to apply online for Godrej Capital Business Loan

Myth  2: Only credit score matters

While lenders do consider your credit score closely, they also take into account other significant factors when assessing your loan application. These factors include income proof, income tax returns, educational qualifications, citizenship, etc. Although having a good credit score is advantageous, many lenders recognize that individuals aren't faultless. Certain lenders extend loans to small and medium businesses, even if your credit score isn't top-notch. Therefore, there's no need for excessive concern – options exist for everyone!

Also Read: What Can You Do To Improve Your Credit Score?

Myth  3: Low Interest Rates are a Myth

Guess what? Low interest rates are not a myth – they are real! Some people think it's impossible to get a loan with a low interest rate, but that's not true. Many lenders offer good and competitive rates. Sometimes your choice of the loan for your business growth also matters. For example, you can get lower interest rates on business loans that are secured against a collateral, like Godrej Capital Udyog Loan Against Property option. A secured loan like Udyog LAP or Business LAP will help you obtain a loan against a variety of collaterals, such as a plot, commercial property, or residential property. It offers lower interest rates as compared to an unsecured business loan option, and offers higher eligibility with multiple income sources being considered.

Some lenders also offer Overdraft Facility. It's like having extra cash instantly available when your business needs it most. With no fixed repayments, you only pay back what you use, making borrowing flexible and stress-free. It’s easy, flexible, and hassle-free borrowing to keep your business moving forward.

Also Read: Understanding Overdraft Facility: A Simple Explanation

Myth  4: Business Loans are not Gender Neutral 

This one is just not true! Business loans are not only for men. Mostly, all loans are gender neutral. In fact, some lenders these days offer specialised loan offerings for women entrepreneurs. These loans are made to support and help women-led businesses. Even the Indian government has launched women-centric schemes like Mudra Loan for women and Annapurna Scheme, among others. You can explore loans at discounted rate, flexible repayment plans, and more.

Also Read: Top Business Loans for Women in MSME

Myth  5: EMI Payments Are Set in Stone

Some people think that paying back a loan is strict and inflexible. But it doesn't have to be! Many lenders understand that businesses have ups and downs. They let you be flexible with your payments. It's like having a dance partner who adjusts the steps based on the music – making it easier for your business.

For example, Godrej Capital Business Loans come with a feature called, Design Your EMI. This feature lets you make your own EMI plan so you can better manage your finances as per seasons and cashflow availability.

💡Pro-tip: Use an online EMI calculator for Business Loans to estimate your monthly payments and manage your finances easily.

Myth  6: Collateral-Free Loans are a Fairy Tale

Indeed, it's a fact—obtaining a loan without the need for valuable collateral is possible. Many lenders offer loans without requiring any form of security. While it may seem like a miraculous solution, it's actually a pragmatic approach aimed at streamlining the loan application process for businesses. In cases where you lack property to use as collateral, you have the option of applying for a Business Loan. This loan doesn't require collateral and provides competitive interest rates along with flexible repayment terms, allowing you to address your business requirements effectively.

In essence, collateral-free loans mean that you don't have to mortgage any assets, like property or valuable belongings, to get the financial support you need. Traditionally, loans often involved putting up something valuable as security, making it a risky venture for some business owners. However, with collateral-free loans, the focus shifts to the financial health and credibility of your business rather than tying up your assets.

Also Read: Everything you need to know about Business Loans – A definitive guide

To sum it up, understanding these truths about business loans opens many possibilities. Apply online with confidence, no matter your gender. Embrace good interest rates, even if your credit score is not perfect. Experience flexible payment plans and forget about needing collateral. It's time to see business loans in a new light, making your journey to success easier. Remember, in the world of business loans, you have more possibilities than you might think. Go ahead and make your business thrive! Click here to apply now.

Looking for more information? Visit our Knowledge Center today.

Related FAQs  

1.   What are the different types of business loans available?

There are several types of business loans, including term loans, working capital loans, equipment financing, and lines of credit. Each type has its own terms, repayment structures, and purposes.

2.   How can I get a low interest rate on a business loan?

To secure a lower interest rate on a business loan, focus on building a strong credit score, maintaining a healthy debt-to-income ratio, providing adequate collateral, and demonstrating a solid business plan with stable revenue.

3.   How can I get a collateral-free business loan?

While many business loans require collateral, some lenders offer collateral-free options. Factors like business age, revenue, credit score, and industry can influence eligibility. It's essential to compare offers from multiple lenders. Loans that require collateral are known as secured loan. Some examples include Loan Against Property and Udyog Loan Against Property. On the other hand, loans that don’t require a collateral are called unsecured loans. Some examples include: Business Loans, Business Loans for Women, Business Loans for MSMEs.

4.   What documents are typically required for a business loan application?

Common documents include business registration certificates, financial statements (profit and loss, balance sheet), GST returns, income tax returns, and personal identification documents of business owners.

5.   What are the repayment options available for business loans?

Repayment options for business loans vary depending on the lender and the loan type. Common options include fixed monthly installments, and interest-only periods. It's important to understand the repayment structure before signing a loan agreement. Godrej Capital offers Design Your EMI so you can pay interest-only for select months.

Disclaimer:

The contents of this article are for information purposes only & not a financial advisory. For more details, please refer to the product or service document and/ or connect with our customer representative prior to making any financial decision. The information is subject to update, completion, revision, and amendment and may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Godrej Capital or its Affiliates to any requirements. Godrej Capital or its Affiliates shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision. For more information, please visit www.godrejcapital.com