If you own a business and find yourself in a financial crunch, don't worry because you're not alone. Loans are a standard part of doing business, especially during crucial times like startup, expansion or short cash flow.
You may be worried about procuring a loan since banks are stricter than ever with approvals, but online loans are generally much easier to obtain - if you know where to look.
Can I Get a Loan Online?
Online loans are great for businesses because they offer cash quickly and efficiently, and the process is quite simple. Entrepreneur states that most small business owners choose online loans because "they better fit their financing needs."
Here's what you need to qualify:
- A year's worth of financial records is usually recommended, though there are also loans available for startups.
- Your loan options, including total approval amount, usually vary depending on your total monthly revenue. The more cash you have coming in, the more likely you are to be approved for a higher amount - sometimes as much as $250,000.
If you've already applied for a loan with a bank, don't be discouraged. Online loans typically have much lower criteria for approval, and the process is easy.
The Online Loan Process
Before you apply for your online loan, here are the steps to take:
- Check your personal credit report. While many online business loans don't require years of records like banks do, they do need some way to measure your creditworthiness. Generally, they take your personal credit score into account (along with other factors). If you want to qualify for the lowest interest and highest loans, check your credit report for accuracy and completeness.
- Gather your business records. Though many online loans don't require years of business records, a longer history can only help your odds of approval for the best loans. You may be asked to provide information about your outstanding receivables, average revenue, and other financial factors that can be obtained from your financial reports.
- Think about your goals. What are you planning to use this money for? You can't know how much money you'll need until you think about all of ways you want to use it.
- Consider your budget. You'll also need to have a budget that includes a monthly payment that you can afford. Just as with any other loan, you should never borrow more than you can pay back within the loan's stated terms. Though you may qualify for a loan of $100,000, for example, the payments are simply unrealistic if you are making less than $1,000 per month.
- Research loan companies. Before you apply for a slew of online loans, you should first research the lenders to make sure they're reputable. While many online loan companies are completely trustworthy, others may charge ridiculous interest rates or have excessive fees. You can find information about the company by reading customer reviews, asking other business owners for recommendations and checking sites like the Better Business Bureau.
- Apply for your loan. Once you've done all the necessary legwork, it's time to apply for your loan. It's often best to use a site like Original Funding, which matches borrowers to lenders. With this method, you only need to apply once to find the ideal loan for your situation.
Don't be intimidated by the online business loan process; it's truly one of the easiest ways to gain capital for your business. Once you're approved, you may have the cash in hand within just a day or two. Then you can get back to focusing on your business goals.