Traditionally, small business entrepreneurs have often had to approach banks for outside capital when they wanted to pursue or expand their business ambitions. Obtaining a loan from a bank, however, can be an exceedingly difficult process, especially if you lack an established track record or major assets to secure the advance. A great alternative to consider is getting an online small business loan from a firm like Lendified. Here are seven reasons why:
1. It’s a much faster process
Trying to obtain a loan from a bank is massively time consuming. On average, small business owners spend an average of 25 hours filling out paperwork at major banks, according to survey data. Applications to online lenders can be completed in minutes, even from your smartphone. You’ll also know much sooner whether your application has been approved from an online lender, often within hours. Conventional banks may take several weeks to get back to you.
2. You don’t need a vast credit history
Banks historically have approved small business loans based on the business owner’s personal credit history and metrics like industry-specific trends and company overhead. Online lenders, however, incorporate a much broader array of data, including the company’s current cash flow and the health of its brand and reputation. For new entrepreneurs and start-ups, this means…
3. You’re more likely to be approved
In general, banks favour larger companies and are hesitant to approve loans for ambitious but untested entrepreneurs. Small businesses are also subject to higher interest fees than their more established counterparts. And it makes sense for banks. They make more profit investing in larger businesses, who also have more collateral to offer. Various estimates indicate that big banks reject 50 to 80 per cent of small business loan applications. Online lenders have much higher approval rates.
4. Better customer service
Online lending companies are much more agile than the institutional systems, offer transparent rates and fees, and can address any questions or issues you may have with timeliness and attention. You won’t need to visit a branch or wait all morning on the phone.
5. Flexible repayment options
Online lending companies offer more straightforward and flexible repayment processes than the big banks, particularly for short-term capital. Banks generally offer fixed rate loans, often repaid monthly. At Lendified, for example, small business owners can determine the necessary term to repay the loan, up to a maximum of one year. Payments are made bi-weekly, which can put less strain on your cash flow.
With an online lender, you won’t be inundated with mountains of paperwork and can set up easy automatic financial transfers. All your account information will be safely stored and be available at your fingertips.
7. You can choose what’s right for you
It’s a brave new world of small business financing and there are a lot of choices you can make, especially when compared to the big banks. Some lenders specialize in working with brand new companies, while others are experts in larger, long-term loans or peer-to-peer investment. Do some research and see what online lending programs are right for you.