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There are great examples of entrepreneurship that have shown that you can create a profitable business and continue operating with your own resources, without the need for financing. But the truth is that under an environment with greater competitiveness, for a small or medium-sized company, credit is a tool that helps accelerate its growth and improvement. However, when considering it as an aid, many entrepreneurs still have different expectations of what applying for a loan for SMEs implies.

Credit, expectation vs. reality

The main idea is that obtaining a loan or financing is very difficult for a business that takes little time and is also very small. If we compare the access that there is between traditional banking and a fintech, the requirements that a bank requests, are usually more and difficult to obtain for an SME.

On the other hand, request it with a financial institution like OakPark Financial that specializes in loans for small and medium businesses, and also helps with technology to provide better solutions, access to a loan is possible and above all under better terms, that is, better rates, terms and amounts that are adapted to the needs and capabilities of businesses.

Long process

In the same way, it is thought that the process is very slow. Well, in the traditional way, it can take more than 21 days since you start to collect each of the requirements, deliver them and even wait for the definitive answer. This factor is also a discourager because SMEs work in an accelerated way and need to have capital almost immediately.

In our “Report on growth and credit of SMEs 2019”, it was found that the majority, when looking for credit, has a preference because interest rates are accessible and the process fast and simple.

38.65% Interest rate, 21.38% Fast process and 20% Confidence with the institution.

  • Rate

  • Process

  • Trust

Unnecessary indebtedness

Competitiveness in the market completely changes the idea that applying for a loan for an SME is just an unnecessary debt. Since we can say that it is an investment if you want it to work to generate growth and improvement. That is why it is essential that you have thought about the use that will be given to you, and that it is towards a beneficial purpose for the business since this depends if your credit will work to meet your objectives.

In the same survey, we learned about the different uses that credit is given once it is obtained, and the results are surprising since the majority allocates its financing to cover short-term needs and only 27% use it to complete objectives. strategic

Only to pay debts

04 Only to pay debts

In relation to the previous point, it is also thought that financing or credit should only be considered as a last resort. That is to say, at the moment in which the user is already a forced necessity due to the lack of total liquidity or when there is an indebtedness. Something that is totally incorrect, because experts in finance and business, agree that financing must also be present at times when a business is more likely to prosper.

More is better

05 More is better

When comparing the different offers made by financial institutions, it is easy to get carried away only by the amount and term they give. Well, seeing that there is the possibility that you can be a creditor of a loan for more than 10 million pesos and a reasonably long term, many entrepreneurs without sufficient experience in credit accept the offer. This is without taking into account that a long term can increase the risk of debt and that the total cost of the loan becomes much higher.

“More” is not always better; The decision to choose an appropriate amount and term is related to the payment capacity with which it is counted. Since having real data of how much is the burden that can support business to pay financing, the risk is left aside and can be invested in better actions.

As you can realize, certain expectations are holding back the opportunities that a business can have when acquiring financing; Decide to open the way to yours and achieve success.