Thinking of getting an online loan? Like many, you would be in a dilemma of how to find an online small business loan lender, what are the requirements or the preconditions for the same. In this comprehensive guide, you will go through all the initial steps before applying for a Loan.
Is getting an online business loan a good idea?
When you decide to finance your small business the first step is deciding whether to borrow money from the Banks or from the private loan lenders. You are probably thinking of selecting an online small business loan lender because of the following reasons:
- You can’t provide collateral which is needed for getting a loan from banks.
- You want to borrow money with flexible credit check.
- You need the cash fast for your business.
- You can’t get approved by traditional banks because your company is too small with lower cash volumes and sales reserves.
Online loans are convenient and fast. You can compare rates and apply directly on a lender’s website instead of visiting a bank. Online lenders provide small-business loans and lines of credit with funding as fast as 24 hours.
Knowing why you need a business loan and choosing the best type of business lender for you, it sums up your first step in financing your business. Now, it’s time to find out what important factors you need to consider before approaching any loan lenders:
- How much funding does your business need?
- For how long you want the loan?
- Will you be able to repay the loan?
With these three important questions sorted out, you can go ahead and decide on the type of online business loans that works best for you.
Choosing between Secured and Unsecured business finance:
SECURED BUSINESS LOANS- A funding solution that requires the use of any personal/business asset as security against the loan. Secured loans usually come with lower interest rates as the loan is secured by the residual value of the asset. Commonly secured loans are offered by Banks, Online Lenders can also provide some short term secured loans.
UNSECURED BUSINESS LOANS- With an unsecured business loans you can get the funding without any collateral. This funding solution can be given by an online small business loan lender and it usually comes with fast approval decisions. Due to the absence of any collateral, unsecured loans attracts comparatively higher interest rates.
Choosing between fixed and variable interest rates
If you have low-profit margin then make sure you understand the difference between fixed and variable interest rate:
- Fixed- A fixed interest is set by the lender for a period of time. With a fixed rate you know what you will be charged over the term of the loan and have predictable payments.
- Variable- Lender can change the interest rate on a variable business loan from month to month. The variable interest rate may impact your loan repayments.
Do your Research
Following are the factors you should consider while doing your online research for small business loan lender.
- Loan Amounts: Typically online loan lenders don’t offer big amounts like Traditional Bank loans, but they make it easier for smaller and newer businesses to get funding. List out some lenders by doing your research as who can offer loan amounts enough to make a real difference to your business.
- Eligibility for loan approval: Look for lenders who are upfront about what you need to apply, so you can know if you are meeting their minimum eligibility requirement.
- Competitive interest rates: One of the biggest advantages of shopping online for a business loan is the fact that you can search and compare interest rates from a pool of money lenders.
- Application Process – Now is the time to list out your money lender who can offer you quick application and fast turnaround if you are in need of fast cash.
Now that you have selected your online small business loans lender, there are still some checklists you have to keep an eye on to avoid any additional fees or penalties.
- Prepayment Penalties: Some lenders will charge you in case a loan is paid off early. You can avoid this fee by looking in advance at the fine print.
- Additional Fees: There can be additional fees charged by some lenders like “closing fees”, “loan service fees”, “establishment fees”, etc. Always look out for these extra fees in the overall quotation when comparing loans.
Searching for an online loan gives you many advantages as long as you know how to choose the right one for you and avoiding the pitfalls. If you are still confused or have any queries feel free to send your enquiry here: https://www.pineapplefunding.com.au/contact-us