Starting a small business is no more as hustle as it used to be. If you’re short of money for your business, you no longer need to go to a bank to get a loan. There are many online options available that you can go for. In fact, having the option of online loans is not the only perk you can enjoy in this era. You can get a number of overwhelming options from which you can choose the one that suits you.
The online loan isn’t just an alternate option to the bank loan, it’s a hope for all those small businesses that found it hard to get a loan from the bank from the past. The banks follow an unofficial policy of favoring only the large-scale businesses while the small-scale businesses suffer. Online loans are the beacon of hope for small businesses. They are specialized in small businesses.
Differences between a normal bank loan and online loan
There are some key differences between a normal bank loan and online. These differences give an edge to online loans over conventional bank loans.
The processing of loans at a commercial bank is a hectic time and time-consuming. The client has to gather a list of documents and then go through a long procedure of filing an application for the loan before the main process for the loan even begins. The exhausting paperwork to abide by the government’s regulations along with a time-consuming process can be really tiresome. The online services, on the other hand, are a much faster option. The lenders are not banking institutions. They give a loan at a faster rate as there are no government regulations involved nor is there the annoying paperwork. The addition of technology further makes it really quick and convenient.
In banks, there are pre-defined 2-3 categories of loans that you need to see if you’re eligible for. However, in the case of online loans, there is great flexibility based on your budget and business.
With ease comes a price. The online loans offer great convenience and accessibility, but they also come at a higher rate of return than the bank loans. But, there are many options available for these types of financial services.
Top 3 benefits of Online Business Loans
There are 5 prime reasons for the preference of online loans over conventional bank loans.
Applying for an online loan is a lot easier than applying at a bank. You can apply 24/7 without waiting in lines or going through an exhausting time-consuming process.
Online business loans are way faster than conventional bank loans. Your digital documents get checked through an algorithm. All the steps that are there in banks when you apply for loans are there in online loans too, but due to the technology, everything is faster.
Range of choices
A bank usually has 2-3 defined categories of loans and there’s not much they can do if you do not have enough money. However, in online vendors, you can not only get a loan for a smaller business, but you get a range of choices.
Considerations before going for online business
If you’ve made up your mind for an online business loan, there are a few considerations that you need to keep in mind before going for it.
Your personal credit score
Your eligibility for an online loan depends on your personal credit score. This is what online lenders check to see if you’ll be able to pay back the loan or not. This will determine whether you can be trusted or not.
Your History in Business
Just like a normal bank, the online vendors give great weight to your business history so make sure you keep this in mind when looking for options.
Be prepared to Research
As mentioned before, there is a long list of options available, when it comes to online loan schemes. Be sure of your financial requirements and then do extensive research on the online loan schemes available. The loans will vary on their cost, ROI, interest, and many other factors so do complete research before you choose one..
List of online loans available
Following is a list of important services available.
- SBA Loans
- Traditional Term Loans
- Short-term Loans
- Business Lines of Credit
- Equipment Financing
- Invoice Financing
- Merchant Cash Advance