A Guide to Online Business Loans
In this day and age, traditional banks are not your sole options when you are searching for capital to fund your own business. Whether it is a short term loan or an installment loan you need, there are loans you can apply over the Internet which are known as online loans.
Ten years ago, the rarity of online business loans did not make it a viable alternative for borrowers. Instead, conventional banks were the norm when small business owners were in need of funding. Majority of small business loans are still provided by commercial banks today even though it is quite difficult to avail of them.
Commercial banks tend to tighten access to credit for small businesses because of the following reasons. Rightly or wrongly, they still think lending to small businesses is a risky proposition. In addition, the process of lending to small businesses is as exhaustive as that of bigger businesses but with a smaller payoff. Nowadays, only a limited number of small businesses are approved for bank loans.
Thankfully, there are online business loans to fill the slack. 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. If you applied for a bank loan for your startup business and was declined, you may want to consider an online loan. So what are the significant differences between a bank loan and an online business 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.
This is because alternative lenders such as those offering online business loans do not have to deal with a number of government regulations that banking institutions have to follow. That means online loan processing will also require no paperwork. 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 done online, the processing of your small business loan application will be considerably quicker.
The business loans offered by regular banks are very traditional such as term loans, credit cards, and lines of credit. With online business lenders, you will have some flexibility in choosing your loan product depending on your need. You do not have to limit yourself to the usual loans. There are all kinds of online business loans depending on where it will be used.
There is also a range of loan sizes online lenders offer depending on the amount you need for your small business. While most banks won’t lend for less than R250,000, online lenders can lend from R5,000 to R250,000.