The Internet has ruled over the existing business industry. Worldwide internet access enables us to work remotely, connect with colleagues, and provide services to customers. Advanced internet technology marked up the significance of online business loans obtained by borrowers.

Gone are the days when a business owner seeks help from local banks to obtain a loan. All credit goes to the advanced technology, that we got more access than ever to afford the business finances.

Quick online search engine results as a list of lenders and loan options. If you’re about to apply for a business loan, an online loan may be exactly what you’re searching for. Anyhow, if you’ve never had experience with an online loan, you possibly have questions in your mind such as: Why we obtain a loan from a lender instead of getting local bank services? What are the benefits and possible hitches of an online business loan?

What Is An Online Business Loan?

You can apply for a business loan with just a click; all you need to do is simply visit the lender’s website and fill up the required application form. However, you may also be requested to submit essential documents via secure web portals. To access the bank statements, web applications can directly link the lender to your bank account.

Usually, the entire business loan procedure works online but some lenders may require a phone call to verify the application. You can avail loan via direct deposit and many lenders set up the option to connect your bank account for automatic payments.

Online Business Loans vs Local Bank Loans

Online business loans are different from bank loans and easy to apply. Instead of heading toward the bank, online loans enable you to apply from the ease of your home, office, or anywhere with an internet connection. Therefore, online loans are known for quick processing and funding options. Sometimes, the loan can be approved in a few minutes and funded within days — or even within 24 hours.

In an online lending procedure, documentation criteria is less strict as compared to traditional banks. Lenders offer a number of loan options to start a business or a business with low credit score and revenue. However, the local bank requires high revenues and credit scores to offer you a loan.

Types of Business Loans Offered Online

While applying for a loan, a business owner came up with a number of loan types offered online than ever before. Here are the most known lending types you can find online such as:

  1. Installment Loans

Installment loans enable a business owner to get a specific lump sum amount of money for a business. The borrower is liable to pay back the loan amount including interest in equal payments over a fixed time period. Usually, installment loans are obtained to fund larger purchases, such as a commercial vehicle or real estate. It helps a business to make purchases without paying total amount up front.

  1. Small Business Administration (SBA) Loans

Small Business Administration (SBA) offers favorable resources to business owners. SBA has set guidelines for several funding plans, including banks or nonprofit organizations and it doesn’t lend money directly to small business owners. However, these guidelines are helpful to keep the interest rate low and term favorable for business owners.  The SBA reduces the risk for lenders and assists them to receive the capital. SBA loans are best to obtain if you’re looking for a long-term loan and compatible for the business with high credit score. Some available SBA loan programs are:

  • 7 (a) Loans

Small business loans can be utilized for business development, working capital, inventory, equipment, and real estate purchases.

  • Microloans

Small loans offering up to $50,000 that can be used for working capital, inventory purchases, and business projects.

  • CDS/504 Loans

Large loans are used to purchase fixed assets such as equipment or real estate. Whereas, 504 loans are being offered in partnership with Community Development Companies and banks.

  1. Business Line of Credit

A business line of credit allows a business owner to borrow money, refund it, and borrow again, up to the credit limit. However, interest is being charged on credit that has been used to meet the business finances. In need of urgent funding or working capital, a line of credit is a suitable option for a business. Some lenders offer a business line of credit online and the application gets approved within a few days.

  1. Short-Term Loans

Short-term loans are similar to installment loans. Installment loans are usually obtained for smaller amounts and required to be paid back in a short period of time. However, short-term loans often have higher interest rate and business along lower credit score or revenue prefer these loans, especially when they are unable to qualify other funding.

  1. Merchant Cash Advance (MCA)

In merchant cash advance (MCA), a business owner is provided with a lump sum amount of money in exchange for a specific portion of business’ future credit and debit card sales. It’s a quick approach to receive a business loan without collateral even you don’t have higher credit score and revenues.

  1. Equipment Loans

A business needs an equipment loan to purchase new equipment.  With this funding, a business enables to buy required equipment over monthly payments rather than paying cash up front. Usually, equipment loans have fewer requirements without collateral because the financed equipment is used as collateral.

  1. Invoice Financing

Business with lower cash flow due to unpaid invoices are able to obtain invoice financing. With invoice financing, a business immediately gets money to complete the pending invoices and account receivable consider as collateral.

Moreover, invoice factoring is another type of invoice financing where a lender pays a specific percentage of an invoice as a cash advance. The lender collects payment on an invoice, once it gets paid, the remaining money is paid to the borrower.

Online Business Loans—Advantages & Disadvantages

There is possibly no other way to save time while looking for loans to fulfill the financing need of a business and they can head toward banks for lending. Online business loans may sound great and have multiple benefits over other types of funding.  However, you may have to deal with the disadvantages as well.

Online Business Loans Advantages

  • In online business loans, an application proceeds quickly. Sometimes, loan application approves instantly and you receive money within a few days.
  • If a business needs money in case of an emergency, it would be a suitable option to go for online lending rather than waiting weeks for a traditional loan.
  • As a borrower, you’re free to apply for a loan anytime and don’t need to visit banks.
  • The online business loan process is easy, no need to compile paperwork to get loan approval.
  • Online lenders usually offer loan to almost any business owner, even ones who face trouble while qualifying for a loan. A business owner can overcome their financing needs via online lending, whether it’s a credit score issue or cash flow challenges.

Online Business Loans Disadvantages

  • Online business loan options are often more expensive than other lending options.
  • Repayment terms may not have a long time period as traditional bank loans and you’re required to pay back money within a short time period.
  • Online business loans are offered along with additional charges that banks and some lenders don’t charge.

Online business loans make it easier than ever to get the money required for a business. These lending options are great for quick funding, it’s important to understand the online lending process and review the offers you’ve received. Consider all the requirements before applying for a loan.

Come over to our website and apply for Online Business Loans to meet your business financing needs. For daily updates and financial solutions, follow us on Facebook (@Onlinecheck) and Twitter (@Onlinecheck). In case of any query feel free to call on toll-free number (833) 827-4412 and our financial experts will assist you.

Small Business Financing News │ Merchant Advisors | blog
Everything You Need To Know About Online Business Loans
Everything You Need To Know About Online Business Loans
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Consider these things before you sign on the digital dotted line of an online business loan. Here is everything you need to know!
MichaelGavin
Merchant Advisors
Merchant Advisors
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