It takes money to run and grow a business – so what do you do if you don’t have the funds that you need, when you need them?

It pays to be careful, but a small loan may be the perfect solution for your business. Make sure that you don’t pass up a valuable opportunity to secure funding due to myths or misinformation.

Myth: A bank is the best place to go for a small business loan

A bank may seem like the logical place to go for a business loan. However, getting a bank loan can be difficult if you’re looking to borrow a relatively small amount of money.

You’ll also struggle to secure a bank loan (at least one with reasonable terms) if you have a tarnished credit record.

In this case, you should consider a short-term asset-based loan, for which the application process is quick and painless. This type of loan is typically granted without any need for background or credit checks.

Myth: You can’t trust any lender other than a bank

Worldwide, small loans providers make up a significant industry – one that’s highly regulated and that includes many reputable companies.

Just be cautious and use common sense when choosing a loan provider. In South Africa, legitimate lenders will be registered with the National Credit Regulator and comply with the terms of the National Credit Act – as we do at lamna.

Beware any lender that withholds information from you, requires fees upfront or is vague about any of the terms and conditions of a loan.

Myth: Interest rates should be the only determining factor

Although interest rates are an important factor to consider when looking for a loan, other factors should also inform your decision.

Of course, make sure you choose a reputable lender. In addition, consider when and for how long you’ll need to repay the loan, as well as any fees in addition to the interest charged. Any “extra” fees or penalties could significantly affect the total cost of the loan.

Myth: Applying for a small business loan is difficult

This really depends on what type of loan you apply for. Obtaining a traditional, non-secured loan (like a bank loan) for your business is generally more difficult than applying for an asset-based loan.

This is because a lender like a bank relies on specific information about you and your business to help it guess the odds that you’ll repay a loan.

In contrast, an asset-based lender considers only the value of an asset you offer as collateral when offering you a loan. So there’s no need for guessing or extensive paperwork.

With lamna, you can even submit an application online, and the process is simple and transparent.

Myth: Getting approved for a loan takes a long time

Banks typically take a week or more to approve a loan application. However, an asset-based loan is a good option if you need funds fast.

With lamna, for example, you’ll typically receive the funds you need on the same day that you make your loan application.

Myth: Loan approval is based on a rigid formula

It’s common to assume that lenders rely on sophisticated computer algorithms to approve or deny loans – simply feeding in information and getting objective results.

The truth is that traditional lenders consider a number of more subjective factors before granting loans. For example, these can include your business plan, whether you’ve supplied sufficient information with your application and your history with their institutions.

Approval for an asset-based loan, on the other hand, is determined solely by the value of the asset that you offer as collateral for the loan.

Myth: You need to have a good credit rating to qualify

Your credit score will influence the success of your application for a traditional bank loan.

However, there are lenders that offer small business loans to those without stellar credit ratings.

Most asset-based lenders don’t perform credit checks. That’s because they have no need to investigate your financial history – instead they use the value of an asset you provide as collateral for a loan.

If you’re looking for a fast, discreet loan with no credit checks, consider an asset-based loan from Lamna. We offer short-term loans against the value of various assets, including motor vehicles, fine art and jewellery.