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. There are loans you can apply for over the Internet which are called online loans that include short term loans and installment loans.
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. 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. Nowadays, only a limited number of small businesses are approved for bank loans.
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?
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.
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. You do not need to spend a lot of time gathering documents the same way the lender will not spend a lot of time processing them. 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. 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. There are all kinds of online business loans depending on where it will be used.
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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