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. 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. Instead, conventional banks were the norm when small business owners were in need of funding. 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. 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 can be helpful. 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 are the significant differences between a bank loan and an online business 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. No government red tape means no paperwork. You do not waste time looking for and gathering documents as the lender won’t need them in processing your application. And because it is done online, the processing of your small business loan application will be considerably quicker.
With conventional banks, you will be offered common business loans such as term loans, credit cards, and line of credit. With online business lenders, you will have some flexibility in choosing your loan product depending on 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.
There is also a range of loan sizes online lenders offer depending on the amount 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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