The financial state of the U.S is bouncing back, with the job-creation rate increasing to the strongest as compared to last year. Small business lending is one big thing that still needs rebound from the financial crisis. As stated in The Wall Street Journal, business loans of under $1 million is down with an enormous 14% rate since 2008, and the credit goes to the risk taking among the majority of lenders in USA.

Fortunately, still, this credit crunch has enabled many new startups to renounce and rise as a way to avoid bank lending and secure the working capital from online sources they need badly to grow their businesses. Such online lending comes in all sorts and conditions.

You will find lenders like Merchant Advisors, which provide business loans from $5,000 to $500,000 with flexible repayment terms and affordable interest rate. OnDeck, a similar lender, offers loans from $5,000 to $2500,000 with terms up to 6 months. LendingClub is a peer-to-peer lender connecting borrowers with investors, including institutions and individuals and offering loans up to $35,000 with varied loan terms. There are other marketplaces where up-and-coming startups can secure capital for business expansion from credited online investors.

The online lending marketplace offers small businesses three options that traditional lenders usually can’t:

  • Quick Access to Capital

According to NY Federal Reserve Bank survey, on average startups spends 24 hours searching and applying for loans. In case of traditional lending, the loan process takes weeks and rejection rate is higher. While in online lending, the loan process takes minutes and approval rate is higher.

Online lenders use a robust data set to establish the eligibility criterion for funding. While traditional lenders consider factors like business nature, size and personal credit history. The online lender use technology to review the applicant current conditions, so no one gets rejected on subjective grounds.

  • Flexible Loans Terms

Traditional lenders like banks are distended institutions filled with lined of middlemen and overheads, causing additional cost to every transaction. For that reason, they prefer to approve bigger loans as they generate bigger profits for them. And online lender on the other hand can easily cut the cost of loan approvals.

Online lenders use online tools to determine loan eligibility or allow investors to conclude whether a business loan application is eligible or not. Whereas banks pass loads of paperwork to employees to inspect every application and making the process tedious and lengthy. Hence, online lenders offer greater savings to the applicants in form of improved loan terms by taking off the layer of wastefulness.

  • Little Documentation

The online lending platforms have learned from banks’ mistakes and make a steady loan application process offering fast decision making and approvals. This means just uploading few financial statements rather visiting to the lender or having extensive dialogues with a loan officer. Securing fast capital from online lenders is the biggest perk especially for time-strapped businesses.