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.
Ten years ago, the rarity of online business loans did not make it a viable alternative for borrowers. Small business owners preferred to go to conventional banks for their capitalization needs. 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.
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. There is also the notion that the process of extending credit to small businesses is just as laborious as lending to bigger businesses but with lower returns. Nowadays, only a limited number of small businesses are 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. An online loan may be worth your consideration if your application for a bank loan for your small business was rejected. 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 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. There are all kinds of online business loans depending on where it will be used.
Furthermore, online lenders can offer an assortment of loan packages depending on what your small business needs. 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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