A Guide to Online Business Loans
In case you are an entrepreneur who is looking for capital to jump-start your business, you may want to look beyond traditional banks for your funding needs. 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. Conventional banks were still the preferred source of funding by small business owners. Fast forward to today and commercial banks still lead the way when it comes to providing credit even though regular banks loans are very challenging to secure.
What are the reasons commercial banks make it tough for small businesses to access credit? 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.
This is where online business loans become an option. What commercial banks won’t serve, online lenders are there to extend credit to small enterprises. An online loan may be worth your consideration if your application for a bank loan for your small business was rejected. So what are the significant differences between a bank loan and an online business loan?
Applying for a regular bank loan has not been characterized as a speedy process. This is different from applying to an online lender wherein the process is much, much faster.
The reason for this is that online business lenders are not banking institutions that have to comply with a number of government regulations that slow down the loan approval process. That means online loan processing will also require no paperwork. You do not waste time looking for and gathering documents as the lender won’t need them in processing your application. And like most things online, the use of technology of online business loans will speed up things significantly.
With conventional banks, you will be offered common business loans such as term loans, credit cards, and line of credit. With online business lenders, you will have some flexibility in choosing your loan product depending on your need. Your choices are not restricted to the customary loan offerings. 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 many bank loans won’t settle for less than R250,000, online business loans can be from R5,000 to R250,000.