A Guide to Online Business Loans
Now that you are ready to start your own business that requires some funding, there is no need to limit your options to traditional banks. There are loans you can apply for over the Internet which are called online loans that include short term loans and installment loans.
Ten years ago, the rarity of online business loans did not make it a viable alternative for borrowers. Conventional banks were still the preferred source of funding by small business owners. Majority of small business loans are still provided by commercial banks today even though it is quite difficult to avail of them.
What are the reasons commercial banks make it tough for small businesses to access credit? Whether justified or not, they think that lending to small business remains a risky proposition. It does not help that the small business lending process is just as exhaustive as that of bigger business but with a lower payoff. The reality is that only a small percentage of small business today can be approved for bank loans.
This is where online business loans can be helpful. There are online lenders in the lending marketplace to fill the void left by commercial banks that won’t open up credit for small enterprises. An online loan may be worth your consideration if your application for a bank loan for your small business was rejected. Below are the distinguishing characteristics of an online business loan compared to a bank loan.
If you had experienced applying for a regular bank loan, then you know that it is a slow-moving process. Applying to an online lender, on the other hand, guarantees a much, much faster process.
Because they are not banking institutions, the online business lenders do not have to conform with the list of government regulations that slow down the loan approval process. This also means that there is no paperwork required in your application. You do not need to spend a lot of time gathering documents the same way the lender will not spend a lot of time processing them. And because it is online, expect the processing time of your small business loan application to speed up considerably.
Regular banks tend to offer term loans, credit cards, lines of credit and other traditional business loans. On the other hand, online business lenders can adapt their loan products according to your needs. You are not bounded to old loan offerings. There is a variety of online business loans modified for different purposes.
In addition, online business loans come in varying amounts subject to how much you need for your small business. If a bank won’t consider processing loans for less than R250,000, online lenders will do it for you from R5,000 to R250,000.
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