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.
Borrowers from ten years ago would not find online business loans a viable alternative for their needs. Small business owners preferred to go to conventional banks for their capitalization needs. 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. 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. The reality is that only a small percentage of small business today can be approved for bank loans.
This is where online business loans can be helpful. 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. In case your bank loan application for your startup business was declined , you may want to look at an online loan. So what makes an online business loan different from a bank loan?
Applying for a regular bank loan has not been characterized as a speedy process. 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 waste time looking for and gathering documents as the lender won’t need them in processing your application. And because it is done online, the processing of your small business loan application will be considerably quicker.
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. Depending on your purpose, there is an online business loan that corresponds to your needs.
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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