Short Course on Loans – Getting to Square 1

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. Whether it is a short term loan or an installment loan you need, there are loans you can apply over the Internet which are known as online 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. 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. Because of these reasons, only a small percentage of small businesses can qualify for bank loans nowadays.

This is where online business loans become an option. Online lenders are in the lending marketplace to serve small enterprises that were not approved for bank credit. 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?

Fast cash

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.

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. No government red tape means 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 like most things online, the use of technology of online business loans will speed up things significantly.

Accommodating options

With conventional banks, you will be offered common business loans such as term loans, credit cards, and line of credit. Online business loans, on the other hand, afford you some flexibility when it comes to choosing the loan product that will suit your need. Your choices are not restricted to the customary 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. While most banks won’t lend for less than R250,000, online lenders can lend from R5,000 to R250,000.

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