10 Common Myths about Small Business Finances (and the Truth behind Them) 

Small business owners often face unique finances challenges that can be difficult to navigate.

There are a number of common myths about small business finances that can make these challenges even harder to overcome.

Myth 1: Small businesses don’t need to track their spending

The Truth:

Small businesses should actually be extra careful about tracking their spending. Without proper record-keeping, it can be easy to lose track of where your money is going and miss out on potential tax deductions.

Myth 2: It’s always best to keep business and personal finances separate

The Truth:

There is no one-size-fits-all answer to this question. In some cases, it may make sense to keep your business and personal finances separate. However, in other cases, it may be more beneficial to mix them together. You’ll need to weigh the pros and cons of each approach to decide what’s best for your business.

Myth 3: You should never use personal savings to finance a business

The Truth:

Again, there is no right or wrong answer here. Some people choose to finance their businesses entirely with personal savings, while others prefer to avoid using their own money if possible. There are pros and cons to both approaches, so you’ll need to decide what’s best for your situation.

Myth 4: Business credit cards are always a bad idea

The Truth:

While there are some risks associated with using business credit cards, they can also be a helpful tool for managing your business finances. Used responsibly, business credit cards can help you build business credit and earn rewards that can save you money on business expenses.

Myth 5: You need to have perfect credit to get a small business loan

The Truth:

You don’t need perfect credit to get a small business loan. In fact, there are a number of lenders that specialize in providing financing to businesses with less-than-perfect credit. However, it’s important to keep in mind that you may pay higher interest rates if your credit is not good.

Myth 6: Small businesses should never use debt financing

The Truth:

Debt financing can be a helpful way to finance your small business, but it’s important to use it responsibly. If you’re not careful, debt can quickly become a burden for your business. When used wisely, however, debt financing can be a helpful tool for growing your business.

Myth 7: The only way to get a small business loan is to go through a bank

The Truth:

Banks are not the only source of small business loans. There are a number of alternative lenders that offer financing to small businesses. These lenders may be able to provide you with the financing you need, even if you don’t qualify for a loan from a bank.

Myth 8: Invoice factoring is always a bad idea

The Truth:

Invoice factoring can be expensive, but it can also be a helpful way to manage your cash flow. If you’re having trouble paying your bills on time, invoice factoring can be a way to get the cash you need to keep your business running.

Myth 9: Small businesses don’t need insurance

The Truth:

All businesses, regardless of size, should carry some form of insurance. Insurance can protect your business from a number of risks, including property damage, liability, and theft. If something goes wrong, insurance can help you cover the cost of repairs or replacements.

Myth 10: The best way to save money is to do everything yourself

The Truth:

While it’s important to be frugal with your business expenses, there are some things that are worth paying for. In some cases, it may actually be more expensive to do things yourself than to hire someone else to do them. For example, if you’re not an experienced accountant, it may be worth paying for professional accounting services.


There are a number of myths about small business finance. However, the truth is that there is no one-size-fits-all answer to the question of how to finance your small business. The best approach for your business will depend on a number of factors, including your credit history, the amount of money you need to borrow, and the type of business you’re running.