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Business Loans 101: 6 Myths You Should Know and Why They Aren’t True

By Genmar Dadivo
Business Loans 101: 6 Myths You Should Know and Why They Aren’t True


Business loans offer a viable means for entrepreneurs to get funding for various purposes. Loans can be used as capital, enabling you to kickstart your business journey. You can also use the extra funds to open a new branch, hire more workers, or upgrade technologies.

However, many business owners are somewhat averse to taking out a loan for different reasons. Some of these reasons are valid, but others are rooted in misconceptions.

Cebuana Lhuillier Kanegosyo Center is here to put an end to these erroneous beliefs! We are a business platform offering online business loans for MSMEs in the Philippines. Join us in this article as we debunk several myths surrounding business loans.

Common Business Loan Myths Debunked  

Are you hesitant to take out a business loan because you believe in some, if not all, of the common loan myths listed below? Continue reading to learn why they aren’t true.

Taking Out a Loan Means Your Business Is Struggling 

This is not necessarily true. Just because you plan to apply for a business loan doesn’t mean your business is failing. With the right purpose, business loans can become a strategic decision to improve your operations, enhance production, or take advantage of an opportunity for growth. All these positively impact the business, resulting in more profits for you eventually.

Always Choose the Loan With the Lowest Interest Rates

Interest rate, expressed as a percentage, refers to the amount charged by lenders to the other party that borrows their money. Basically, it’s an additional amount you need to pay on top of the original money you borrowed.

When choosing a loan, you may think it would be best to pick one with the lowest interest rates. However, you should take note of other fees, such as service and processing fees, that lenders charge. Another thing to consider is the loan term. A longer loan term with lower interest fees may not always result in a better deal.

It Is Not Safe To Apply for a Business Loan Online 

Financial transactions like loans often involve submitting sensitive information. This is why many business owners tend to think that applying online may not be a wise thing to do. That being said, you don’t have to be afraid of online business loan transactions. Just ensure you’re transacting with a reputable lender, and this can be done by checking if they’re regulated by government institutions. You should also visit the lender’s website to see if it is secure.

Entrepreneurs Need Collateral To Obtain a Loan 

Some business owners refrain from taking out a loan due to the lack of collateral, which refers to an assets, such as a property or vehicle, that serve as a pledge to secure the loan. However, not all loans require collateral, such as those offered by online MSME loan platforms in the Philippines, like Cebuana Lhuillier Kanegosyo Center. This makes access to funding more manageable for small business owners.

Micro and Small Enterprises Cannot Apply for a Loan 

There are many lenders that cater to small and medium-sized businesses. Lenders are more concerned about the ability of the business to repay the loan than the size of the business. For this reason, you must be prepared to demonstrate to the lender your capability to pay the borrowed money on time.

The Loan Application Process Is Difficult 

Perhaps you aren’t considering business loans to secure extra funds because you think the process is too lengthy and complex. This is another myth! Cebuana Lhuillier Kanegosyo Center’s MSME loan application process in the Philippines, for instance, is quick and straightforward and can be accomplished online. Simply register to become a member first to get started with your application.

Things To Consider Before Applying for a Business Loan 

Now that you’ve been enlightened on various business loan myths, you’re a step closer to getting started with your loan application. However, before you apply, check out these things you need to consider first:

Determine the Amount You Need 

Usually, the amount you will need to borrow will be based on your needs and the amount you can realistically repay. If you’re just in the initial stages of your entrepreneurial journey, you may use the loan as capital to get your business off and running. A couple of months or years afterward, you may need a loan to hire more workers, purchase new machinery, and invest in research and development for your products, among other purposes.

Assess Your Credit Profile 

Lenders will want to look at your capability to repay a loan. One way they do this is by checking your credit score, a three-digit number that shows a person’s ability to pay off their debt. This score is calculated using information from the person’s credit report, which you can get online through CIBIApp.

Identify the Requirements 

Different lenders will have varying requirements for business loans. In general, the criteria for entrepreneurs include the legality, operation length, and financial health of the business.

How to Successfully Apply for an MSME Loan Online in the Philippines 

Below are several tips you can follow for a successful business loan application:

Improve Your Credit Score if Needed 

Having a good credit score can improve your chances of loan approval and help you qualify for higher loan amounts and lower interest rates. To improve your credit score, make sure you practice good financial habits. Specifically, you should pay your bills on time, avoid maxing out your credit card, and refrain from applying for multiple loans.

Organize Your Documents 

You will be asked to submit several documents as part of your application. The specific papers differ per lender, but generally, you will need to submit business licenses, permits, valid IDs, financial statements, and proof of billing, among other documents.

Do Not Be Afraid To Ask for Help 

It’s normal to feel intimidated or somewhat lost as a first-time loan applicant. Never be ashamed to ask for help! Cebuana Lhuillier Kanegosyo Center offers Kanegosyo Coach services that provide multiple resources on various business topics, including loans.

Start or Grow Your Business With Loans From Cebuana Lhuillier Kanegosyo Center 

Getting funding is one of the primary obstacles business owners face. Cebuana Lhuillier Kanegosyo Center is an online business platform that aims to remedy this problem by offering loans for starting and growing a business.

Our MSME business loan application in the Philippines offers an easy and quick means to obtain money that entrepreneurs can use as capital or extra funds to expand their operations.

To apply, sign up to become a Cebuana Lhuillier Kanegosyo member first. Membership is free, and no other documents are needed. All you need to prepare is your contact number (mobile or landline). You may then choose from our Simula or Paglago Bundle. Both packages include loans and other products to help you start or grow your businesses.

FAQs About Online MSME Business Loans in the Philippines 

Where Can I Take a Loan for My Small Business in the Philippines? 

Various lenders offer loans for small businesses. You can turn to banks, government agencies (e.g., SSS), microfinance institutions, or business platforms like Cebuana Lhuillier Kanegosyo Center.

Borrowers can get up to ₱50,000, which is enough for micro and small business owners to start or grow. To apply, you will need to submit a valid ID, your latest ITR (income tax return), business permits, and other business-related documents.

What Are the Different Types of Business Loans Available in the Philippines? 

There are different types of business loans in the country. Secured loans are loans “secured” by a collateral. In contrast, unsecured loans are a type of loan that does not require collateral. Another type of loan is the term loan, which can be either short-term or long-term. Here, borrowers pay back the money at regular intervals with interest.

Which Kind of MSME Is Most Profitable? 

Food businesses, such as catering services, cafes, and bakeries, are still some of the most profitable MSMEs to try. You can also try selling various services online, such as tutoring, virtual assistance, digital marketing, and so on. If you are a skilled artisan, consider selling your creations as well.


Taking out a business loan doesn’t have to be as scary as it sounds. When used properly, loans empower entrepreneurs to take their business ideas to the next level.

Sign up to become a member to access Cebuana Lhuillier Kanegosyo Center’s online MSME business loans in the Philippines. You may also reach out to us if you have any questions or concerns about our products and services. Contact us today!