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. You can now apply for short term loans, installment loans, or any loan over the Internet which is known as online loan.
Online business loans are not that common and a viable alternative ten years ago. Conventional banks were still the preferred source of funding by small business owners. Today, the lion’s share of small business loans are still extended by established banks even though availing of one is easier said than done.
There are reasons why commercial banks tighten access to credit for small businesses. The number one reason is that they consider lending to small business a high-risk investment. It does not help that the small business lending process is just as exhaustive as that of bigger business but with a lower payoff. Because of these reasons, only a small percentage of small businesses can qualify for bank loans nowadays.
Thankfully, there are online business loans to fill the slack. Online lenders are in the lending marketplace to serve small enterprises that were not approved for bank credit. If you applied for a bank loan for your startup business and was declined, you may want to consider an online loan. Below are the distinguishing characteristics of an online business loan compared to a bank loan.
Anyone who has tried processing an application for a regular bank loan knows that it can take days before the results are known. Try applying to an online lender and you will notice the difference in how much faster the process is done.
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. 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.
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 are all kinds of online business loans depending on where it will be used.
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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