Technology has made life easier in many ways. It brings us closer to people far away, has a vast amount of information to improve knowledge and even helps you to shop without leaving your house.
And if you want to grow a company, you can even ask for small business loans, just with a few clicks.
The main difference between online small business loans and traditional ones is the way they work, from the application to the payment deals.
And the truth is that for small business owners, they simplify a very long and tedious procedure that can take away the time they need to build their company.
If you are considering applying for one of these loans, keep reading t find out what you need to do. Let’s get started.
Before applying for a small business loan
Before borrowing money, make sure you have all your ducks in a row.
Make a business plan that identifies every aspect of your project, whether you want to expand your business to new territories, invest in a bigger sales force, or buy equipment to keep up with the demand.
You’ll need to know how much money you need to achieve those goals, how long will it take you to do so, and how much can you pay back every month without affecting your company’s financial flux.
Another thing to consider: it’s smart to shop around these online small business loans. Compare them based on:
- Interest rates
- Amount of the small business loans
- The application process
- The institution that lends the money and it’s reputation
Advantages of online small business loans
Forget about spending hours waiting to talk to a bank executive. These are some of the advantages of this financial instrument:
- Fast application, fast response: Enter your data and send your request. Depending on the platform, within minutes or days, you’ll know if you qualify.
- Fewer requests. Most online small business loans don’t follow the traditional path to assess risk, so you’ll probably just need a bank statement or tax return to prove you exist and you can payback. Even if you don’t have an SNN, there are options you can apply to.
- No credit scores. These companies usually have their own ways to evaluate their candidates, based in something more than a traditional credit score. They can check your earnings, debt ratio, your social media activity, and even smaller bills like electricity or rent.
- Lower or non-existing hidden fees. Online companies tend to be lighter and faster companies that don’t require a lot of people working around the clock. Actually, most of the decision-making process is done by an algorithm. This means you don’t absorb the human resource cost.
- No collateral or upfront payments. This way, you can request the money you need without having to save money first.
Not everything that shines is gold
On your road of shopping for small business loans, you’ll find offers that seem to good to be true.
And if common sense screams at you, you should listen. If a company advertises a really low-interest rate that goes way below the average of all the others, beware.
Another red flag might be if they ask for money in advance, if they don’t have a physical address, or if the company asks you for personal information that doesn’t really match a loan request.
You’ll normally be asked to present:
- Social Security number (or ITIN number, for those who don’t have an SNN)
- Address
- Information about your job
- Income
- Company expenses
- Company tax return
Take into account that you’ll probably won’t get a huge amount of money with these types of loans.
You can borrow from around 5,000 dollars up to 5 million. If you need more than that, it would be a good idea to request a loan with the traditional banking system.