Over the past few years, online lending has increased among small business industry. Though, online lending options offer the easiness, expediency and automation funding process, borrowers must also perform due diligent when understanding the security involved in online lending. Before you opt to apply for an online business loan, it’s significant to know all the security aspects and how the security process works.
Recognition of Alternative Lending Options
The recognition of alternative lending options has emerged due to strict lending requirements. The 2008 financial crisis has caused big banks and communities to either decrease or eradicate small business lending. Stringent guidelines from Federal Reserve allow the prevention of a similar financial crisis to occur again. This also has resulted in the closure of a lot of community banks lending.
According to a 2014 Bank of America Small Business Report, 14% of millennials entrepreneurs opt for alternative lending options over traditional lending. Most alternative lenders like Merchant Advisors offer both small business loans and personal loans. Alternative lending has emerged as the quicker option for businesses looking an alternative to predatory and traditional lending. For instance, with Merchant Advisors, potential businesses can secure funding quickly by using an online automated lending process.
As most of alternative lenders are secure, there are some risks involved which you should know:
- If your credit is not up to the mark or you have a bad credit, some alternative lenders can charge high APR up to 450-650 percent.
- Online lenders have long been the victim of identity theft due to the sensitive information they store. However, reputable lenders spend in more secure processes to put a stop to identity theft.
- Dishonest lenders often include some hidden fee in the fine print.
- There are many scam programs intended to target businesses that require cash in a hurry. So, never share data with someone.
How to Know If a Lender Is Secure?
In order to know whether a lender is secured or not, reviewing below mentioned security features will help you in making a decision:
- Security Socket Layer (SSL) Encryption – SSL is a security technology that set up an encrypted link between a web server and a browser making the information secure and private. When deciding an online lender, ensure the site that requires sensitive information has this on it.
- TRUST e-Certified Privacy Certificate – Such certificates guarantees that the lender has taken steps to safeguard your data online. This includes reviewing data privacy management standards, use of digital property scanning tools, an ongoing privacy monitoring system and a comprehensive review of privacy practices.
- Better Business Bureau A+ Rating (BBB) – BBB is an organization which assist people find the trustable businesses and brands by giving them A+ rating being it the highest rating a business can receive. The rating a business receives based on different factors like proficient licensing, best business practices and customer complaint management.
- Researching – Last but not the least is the researching phase. When deciding a lender, do complete research on the domain, contact information and physical address to make certain it’s a genuine company. The domain searching includes customers reviews, complaints resolutions or data breaches.
You will find numerous online lending options available due to the advancement in the industry. The key is to select one that’s protected and have safety measures in place to safeguard your sensitive information.