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. 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. 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.
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. There is no need to look for and gather documents as the lender won’t require them in order to process your application. 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. With online business lenders, you will have some flexibility in choosing your loan product depending on your need. You are not bounded to old loan offerings. There is a variety of online business loans modified for different purposes.
Furthermore, online lenders can offer an assortment of loan packages depending on what your small business needs. 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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