5 Lies About Business Financing That Are Keeping You Broke (And How to Get It Right)
5 Lies About Business Financing That Are Keeping You Broke (And How to Get It Right)
Stop me if you’ve heard this one before:
"I just need a loan to get this idea off the ground."
Or maybe this one:
"Once I get funding, all my cash flow problems will disappear."
Here is the brutal truth that most banks won’t tell you to your face: Money doesn’t fix a broken business model. It only amplifies it.
If your business is chaotic and you add capital, you just get more chaos, faster. If your business is disciplined and profitable, capital becomes jet fuel.
At Lionhood Financial Coaching, we see brilliant entrepreneurs get rejected for financing every day—not because their ideas are bad, but because their financial narrative is unreadable.
If you are looking to secure capital to grow your business, you need to stop believing the myths and start building a foundation that lenders (and investors) actually trust. Here are the 5 things most people get wrong about business financing, and exactly how to fix them.
1. The Myth of the "LLC Shield"
The Lie: "I have an LLC, so my personal credit doesn’t matter. The business stands on its own."
The Truth: Unless you are a massive corporation with significant assets, you are the business.
For 99% of small business loans, lenders will require a personal guarantee. They are going to pull your personal credit score. If you have been ignoring your personal finances while trying to build a business empire, the bank will see that as a character flaw, not just a financial one.
How to Get It Right: Treat your personal credit like a business asset. Pay down personal debt. Disconnect your personal expenses from your business accounts immediately. You cannot demonstrate stewardship of a company if you aren’t demonstrating stewardship of your own household.
2. Confusing Revenue with "Serviceability"
The Lie: "I made $200,000 in sales last year! Why won’t they lend to me?"
The Truth: Banks don’t care about your top-line revenue. They care about your Debt Service Coverage Ratio (DSCR).
They aren’t asking "Does this business make money?" They are asking, "Does this business generate enough free cash flow to pay me back, with a buffer for when things go wrong?"
If you bring in $20k a month but spend $19.5k just to keep the lights on, you are un-fundable.
How to Get It Right: Focus on net profit, not just gross revenue. Before you apply, run the numbers yourself. Can your current net profit cover the proposed loan payment 1.25 times over? If not, you don’t need a loan—you need a profitability strategy.
3. Treating Bookkeeping as a "Tax Season" Task
The Lie: "I’ll organize my receipts in April when I file taxes. I know roughly where I stand."
The Truth: "Roughly" gets your application denied.
Lenders want to see Year-to-Date (YTD) Profit & Loss statements and Balance Sheets that are current as of last month. If you hand them a shoebox of receipts or a messy Excel spreadsheet, you are signaling that you are a high-risk borrower who doesn’t understand their own numbers.
How to Get It Right: Professionalize your books immediately. Lenders trust standardized, clean financial reports generated by industry-standard software.
- Action Step: Stop using spreadsheets. Move your accounting to the cloud so you can generate a P&L in seconds, not days.
- Resource: Access exclusive savings on QuickBooks Online through our affiliate partner link
4. Borrowing to Solve a Sales Problem
The Lie: "Sales are slow. If I get a loan, I can hire marketing help and turn it around."
The Truth: This is the "Death Spiral."
Financing should be used to scale a proven concept, not to rescue a failing one. Borrowing money to cover a hole in your revenue is like trying to fill a bucket with a hole in the bottom. You are just renting time, and the interest payments will eventually sink you.
How to Get It Right: Validate your sales process first. Generate organic revenue. Prove that for every $1 you put in, you get $3 back. Then borrow money to pour on the fire. Financing is for acceleration, not resuscitation.
5. Walking in Unprepared
The Lie: "I’ll just go talk to the loan officer and explain my vision."
The Truth: Bankers are not visionaries; they are risk assessors.
They speak the language of risk, collateral, and liquidity. If you speak the language of "dreams" and "potential" without the data to back it up, the conversation is over before it begins.
How to Get It Right: Build a "Lender-Ready" package before you ever set foot in a bank. This should include:
- 3 years of tax returns (Personal & Business)
- Current YTD Financial Statements (P&L, Balance Sheet)
- A clear Debt Schedule (what you already owe)
- A specific "Use of Funds" statement (exactly where the money is going)
The Lionhood Approach: Stewardship First
At Lionhood Financial Coaching, we believe that discipline equals freedom.
Getting approved for financing isn’t about tricking a lender; it’s about building a business that is so healthy, funding it is a "no-brainer."
We help business owners in Tulsa and nationwide clean up their books, understand their cash flow, and build the kind of financial discipline that leads to generational wealth.
Don’t navigate this alone.
- Need to clean up your books before you apply? We offer virtual bookkeeping to get you lender-ready.
- Need a strategy to improve your cash flow? Let’s build a plan.
Click here to schedule your discovery appointment.
Or, drop us a line directly to discuss your specific situation: Contact Lionhood Financial
Disclaimer: Lionhood Financial Coaching provides financial coaching and bookkeeping services. We are not a lender, investment advisor, or law firm. The information provided here is for educational purposes only and does not constitute legal, tax, or lending advice. Always consult with a qualified professional regarding your specific business situation.