Advantages of 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. Conventional banks were still the preferred source of funding by small business owners. 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. 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. If you applied for a bank loan for your startup business and was declined, you may want to consider an online loan. So what makes an online business loan different from a bank loan?
If you had experienced applying for a regular bank loan, then you know that it is a slow-moving process. This is different from applying to an online lender wherein the process is much, much faster.
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. 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 because it is done online, the processing of your small business loan application will be considerably quicker.
The business loans offered by regular banks are very traditional such as term loans, credit cards, and lines 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. You do not have to limit yourself to the usual loans. 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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