Small Business Loan Myths

Small Business Loan Myths

Written by Caitlin Wood
Last Updated June 11, 2021

Small business lending and borrowing is a fast growing market with potentially endless limits. Small business’s make up a significant part of the Canadian economy and one of the major things they all have in common is that they need loans. The small business loan demand is ever increasing and alternative lenders are taking advantage of this demand. It’s easier than ever to get the financing you and your business needs.

Unfortunately with all these advancements and increased availability of small business loans comes a lot of misinformation, there are countless small business loan myths that need to be debunked as soon as possible. We’ve put together the top 3 myths that we think you need to know the truth about so you can get the funding you need.

Myth #1: Getting Approved is Time Consuming and Almost Impossible

The alternative lending market is a relativity new phenomenon within the financial world, and it’s only becoming more and more popular. The increasing number of available alternative loans means that it’s no longer impossible for you and your business to get financing you want.

In the past applying for a small business loan from a more traditional lending institution like a bank meant never ending paperwork, countless meetings and hours spend discussion your business’s worth and potential. And at the end of all that the probability of approval was still next to nothing, with advancements in technology and the approval process in general, this is fortunately no longer the case for most small businesses.

Smaller online lenders can approve business loans in days and sometimes even hours with minimal paperwork and minimal stress.  These quick, easy and painless small business loans are the perfect solution or any business owner who is experiencing an unexpected cost or who is looking to improve or expand their company as soon as possible.

Long gone are the days of time consuming meetings that end is rejection, small business lenders are stepping up and providing their clients with approval rates and the quick service they’ve always wanted. No business owner should have to fear the loan process, don’t let previous notions of small business loan practices hold you back from getting the financial you need.

Myth #2: Only Banks and Traditional Lending Institutions are Trustworthy

There is no wonder why most people believe that alternative or online lenders should not be trusted, because for a long time this was the case. Payday lenders and other predatory lenders were at one time the only alternative to bank loans. Predatory lenders have given a bad name to alternative lending as a whole, they exploit borrowers who are desperate and in need of fast cash.

Fortunately, reputable alternative lenders have fought back against those predatory lenders who have tarnished the market with their extremely high interest rates and unreasonable terms. Loans Canada is dedicated to working with its clients to crush predatory lending stereotypes with our customer service based lending practices and secure online loan approval process that can provide you with the financing you need so your small business can develop and grow.

Myth #3: Numbers are Foremost When it comes to Approval

When trying to find the right type of lender for your business it can seem like numbers are the only things that are important these days. Most traditional lenders look to your credit score to figure out whether or not you’ll be a responsible borrower and will only approve you if your business is already significantly profitable. For the average small business owner these strict requirements mean that they’ll never get the funding they need.

One of the greatest benefits of working with a smaller alternative lender is that they’re more often than not more interest in you and your business as opposed to the arbitrary numbers that have been assigned to you. Sure, alternative lenders love to work with businesses that have great credit scores and high profits but they also understand that not all businesses have high credit score and high profits.

Numbers aren’t at the top of most alternative lenders check list, most place emphasis on different issues, values and standards. As a rule of thumb here are a few things that most small business lenders take into consideration when proving loans:

  • Potential
  • Your commitment as a business owner
  • Reputation
  • Business plan

The small business loan process doesn’t need to be long, stressful and frustrating; it can be quick, easy and relativity painless. The myths surrounding small business lenders need to be demystified, not all lenders are looking to take advantage of borrowers looking to get the money they need to help improve their businesses.

Caitlin Wood is the Editor-in-Chief at Loans Canada and specializes in personal finance. She is a graduate of Dawson College and Concordia University and has been working in the personal finance industry for over eight years. Caitlin has covered various subjects such as debt, credit, and loans. Her work has been published on Zoocasa, GoDaddy, and deBanked. She believes that education and knowledge are the two most important factors in the creation of healthy financial habits. She also believes that openly discussing money and credit, and the responsibilities that come with them can lead to better decisions and a greater sense of financial security.

Click on the star to rate it!

How useful was this post?

Research & Compare

Canada's Loan Comparison Platform

Largest Lender Network In Canada

Save time and money with Loans Canada. Research and compare lenders before you apply. Share your experiences with Canada's top lenders.

Save With Loans Canada

Special Offers

Improve Your Credit With Fidem

Improve Your Credit With Fidem

Great unsecured credit card for customers currently in, or recently discharged from, a consumer proposal or bankruptcy

View Offer
Earn 5% Cash Back With Neo

Earn 5% Cash Back With Neo
No annual fee!

Earn an average 5%¹ cash back at thousands of partners and at least 0.5%² cashback guaranteed.

View Offer
Build Credit For $10/Month

Build Credit For $10/Month

KOHO’s Credit Building Program helps you build a better credit history with easy to manage payments for just $10/month.

View Offer
Best Personal Loan Provider by Greedy Rates

Confidential & risk-free

All consultations and conversations with Loans Canada and its partners are confidential and risk-free. Speak with a trusted specialist today and see how we can help you achieve your financial goals faster. Loans Canada and its partners will never ask you for an upfront fee, deposit or insurance payments on a loan. Loans Canada is not a mortgage broker and does not arrange mortgage loans or any other type of financial service.

When you apply for a Loans Canada service, our website simply refers your request to qualified third party providers who can assist you with your search. Loans Canada may receive compensation from the offers shown on its website.

Only provide your information to trusted sources and be aware of online phishing scams and the risks associated with them, including identity theft and financial loss. Nothing on this website constitutes professional and/or financial advice.

Your data is protected and your connection is encrypted.

Loans Canada Services Are 100% Free. Disclaimer

Build Credit For Just $10/Month

With KOHO's prepaid card you can build a better credit score for just $10/month.