Advantages of 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.
Ten years ago, the rarity of online business loans did not make it a viable alternative for borrowers. Instead, conventional banks were the norm when small business owners were in need of funding. Majority of small business loans are still provided by commercial banks today even though it is quite difficult to avail of them.
There are reasons why commercial banks tighten access to credit for small businesses. 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. 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. 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. 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. 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. No government red tape means 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 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. On the other hand, online business lenders can adapt their loan products according to your needs. 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.
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.