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.
Borrowers from ten years ago would not find online business loans a viable alternative for their needs. 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. In addition, the process of lending to small businesses is as exhaustive as that of bigger businesses but with a smaller payoff. Because of these reasons, only a small percentage of small businesses can qualify for bank loans nowadays.
This is where online business loans can be helpful. Online lenders are in the lending marketplace to serve small enterprises that were not approved for bank credit. 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?
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.
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. 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 like most things online, the use of technology of online business loans will speed up things significantly.
Regular banks tend to offer term loans, credit cards, lines of credit and other traditional business loans. 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.
In addition, online business loans come in varying amounts subject to how much 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.
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