Small business loans can be tricky, especially if it’s your first loan.
And, to make things harder, there are dozens if not more online loan options, so where to begin?
The following article will help you understand your options for getting a small business loan online.
The internet has changed everything when it comes to getting a loan. In the past, most small businesses would have to spend hours filling out paperwork and wait weeks, if not more, for some bureaucrat from the bank to get back to you. And, to make matters worse, the majority of the time, your loan would be declined. It is a complete nightmare, a waste of time, and utterly frustrating for business owners wanting to get access to a loan to grow and expand their business or pay off creditors.
The complicated loan process changed when Sparrow Loans made it easy to access secured business loans online.
Here’s an overview of how to get a small business loan online without any fuss or hassle.
How to apply for an SME loan online
In most cases, getting a small business loan online will depend on the lenders’ borrowing criteria. Some lenders like Sparrow Loans are more lenient ( because the loan is secured against an asset such as a property ), while other lenders shave more stringent loan criteria, as the loan is unsecured risk is higher.
Most online lenders will make it super-easy for small businesses to inquire online. In fact, in many cases, it will only take a couple of minutes to fill out the online forms.
With Sparrow Loans, for example, you complete a loan application online in around five minutes. So in terms of loans applications, this has to be one of the simplest in the marketplace. Also, note that all your information is securely stored. Our lenders will base their lending decision on specific criteria, such as your length of business, credit history, credit rating, the amount you wish to borrow, and the secured asset you want to use against the loan.
Based on this information we receive from the online form, we can assess the viability of your loan and how much we can loan the business. You can generally expect to receive an outcome of your loan application within 48 hours, unprecedented considering how long this used to take.
Also read: Small Business Finance: What’s best for you?
1) What are the best online small business loans?
There are many types of small business loans, and these are all based on your current business circumstances. Plus, you need to work out what kind of loan you want. For example, is it a commercial property loan, tax debt business loans, purchasing inventory, paying wages, or debt consolidation loans? So, working out the best type of secured business loan for your small business sits squarely on the purpose of the loan.
2) Make sure you read the fine print when getting a small business loan online
Before you sign on the dotted line, make sure you understand all the implications of your small business loan. Business is not static, and there will always be ups and downs, so you have to consider this when getting the loan. In addition, factors like monthly interest payments and fees have to be accounted for as part of the loan. Plus, you will have to repay it at some point in time. Also, what happens if you want to get out of the loan early? Are there penalties associated with this? And, if so, how much are these penalties and extra charges? So, for example, you take a loan out for 12 months and decide to repay it in 6 months; what are the penalties with this?
Also, check how the interest rate is calculated. Be very aware of any marketing and advertising ploys.
3) Know your financial situation
You probably let your accountant handle all the financial side of things for your business, but if you apply for a loan online, it’s essential to know your current financial standing. Know your
- bank balance
- assets and liabilities
- monthly income and expenses
- future cashflow projections
Once you have a clear understanding of these, you’ll be in an excellent position to determine how much you can borrow and your ability to repay the monthly interest payments. For example, say you wish to borrow $250000, and the interest rate is 6.75%, then you need to calculate roughly an additional $1400 per month interest on top of your current outgoings. Can you afford this? If not, then you have to adjust your borrowing expectations or explore more flexible repayment options depending on any significant future cash flow.
4) Manage refusal of the loan
There is a percentage of online loans that are refused based on the financial information given. Be prepared for that refusal and always get feedback so next time you apply for a loan, your chances of obtaining it are much higher.
5) Understand the difference between secured versus unsecured loans
A secured loan is where a lender will use one of your assets, generally a property, as security against your business loan. This property may be forfeited to the lender if you fail to meet your repayments. Because the lender can hold this asset, the secured loans have a lower interest rate.
An unsecured loan means no security against the loan and might have a higher interest rate.
At Sparrow Loans, all our small business loans are secured.
Lending options continue to grow online
An increasing number of finance options are available online. For example, all you need to do is Google’ small business loans, and you will find lots of online lenders. The trick here is to go with a lender that can give you the best interest rates and customer service.
If you’re considering a small business loan online, you can apply online or book a call through our website, a member of the Sparrow Loans team will be happy to help you through this often complicated process.