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. You can now apply for short term loans, installment loans, or any loan over the Internet which is known as online loan.
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.
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. 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. 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. This is different from applying to an online lender wherein the process is much, much faster.
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. 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. 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.
In addition, online business loans come in varying amounts subject to how much 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.
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