How To Get Online Business Financing
In the past, businesses looking to finance growth had limited options. Using personal savings, borrowing from family and friends, selling to investors, or securing a loan from a traditional bank were some of the more popular avenues to obtain necessary cash for business development. In recent years, a number of new choices have emerged in the business lending market, including online business loans. Alternative online lenders are filling a need by helping businesses that might not have otherwise qualified for a loan get the money they need to fuel their growth. Using some traditional indicators like credit scores and balance sheets, online lenders also take other elements into account when reviewing applications, such as social media presence and relationships with vendors and suppliers.
Preparing To Apply for Online Business Financing
While online business loans do have less stringent requirements than their traditional counterparts, that doesn’t mean you can slack off when it comes to the application process. First, you will need to review (or even create if you don’t already have one) your business plan and outline exactly how much money you need, how you plan to spend it, and how long you’ll need before you see a return. Make sure your projected cash flow is ample enough to repay the loan.
Next, contact one of the three business credit reporting agencies (Dun & Bradstreet, Experian, or Equifax) or a business credit monitoring service and review your current score. Business credit scores are given on a scale of 0 to 100 (100 is perfect). A score of 80 or higher is considered good. If your credit score is not good, work on improving it a bit to ensure the best terms for your loan. This could mean paying down your debt or establishing credit with suppliers and using it responsibly.
Before applying for the loan, you’ll need to gather all pertinent documents to establish your credit worthiness. These documents should illustrate the business’ healthy financial habits as well as those of the owner(s) personally. You should also be able to show collateral (such as ownership of a home or vehicle) to secure the loan. Documents you’ll need to compile include tax returns, balance sheets, and proper business licenses and permits.
Shopping for Business Financing
One of the best parts of pursuing an online business loan is that there are many options to choose from and shopping around can be done easily from your computer. Before you start, determine which type of loan is the best for your business. Options include short- or long-term business loans, SBA loans, personal loans (if your business does not have a lengthy or robust financial history), business lines of credit, and merchant cash advances. There are pros and cons to every type of loan. Do your research and determine the style that will work best for your business’ unique situation.
Once you’ve identified loans that will fit your business’ needs, do your homework, read up on the terms and be sure to check out the fine print. Some loans might have hidden fees or exorbitant interest rates.
Some online services are automated to help you pinpoint loans and lenders that meet your specific small business loan requirements, simplifying the process even further.
Getting Your Online Business Loan
When you’ve found a small business loan that meets your needs and have prepared the necessary financial information, the online loan application process is fairly simple compared to other lending options. Since alternative lenders move at the speed of the Web, loans can be funded within a day or so of approval. Once you have your money, it’s time to apply it to your business plan and get ready to grow!