Reasons to Choose Online Business Loans
In case you are an entrepreneur who is looking for capital to jump-start your business, you may want to look beyond traditional banks for your funding needs. 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. 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. 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. Online lenders are in the lending marketplace to serve small enterprises that were not approved for bank credit. In case your bank loan application for your startup business was declined , you may want to look at 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. 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. This also means that there is no paperwork required in your application. 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.
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. Depending on your purpose, there is an online business loan that corresponds to your needs.
Furthermore, online lenders can offer an assortment of loan packages depending on what your small business needs. 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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