Reasons to Choose 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.
Online business loans are not that common and a viable alternative ten years ago. Small business owners preferred to go to conventional banks for their capitalization needs. Today, the lion’s share of small business loans are still extended by established banks even though availing of one is easier said than done.
Commercial banks tend to tighten access to credit for small businesses because of the following reasons. 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. The reality is that only a small percentage of small business today can be approved for bank loans.
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. 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. This also means that there is no paperwork required in your application. 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.
Regular banks tend to offer term loans, credit cards, lines of credit and other traditional business loans. Online business loans, on the other hand, afford you some flexibility when it comes to choosing the loan product that will suit your need. You are not bounded to old loan offerings. There is a variety of online business loans modified for different purposes.
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.