Online lending is a loan that is not directly from a traditional bank. Many online lenders are referred to as an online lender because they are an alternative to a traditional bank. The term has been used to include credit unions, government loans and other credit that is structurally similar to bank loans but comes from or through a different source.
Online lending has common and successful models that include lines of credit, peer-to-peer programs, factoring, SBA loans, merchant cash advances, and working capital loans. With online lending, you now have more options than ever before. However, people have their concerns regarding online lending because they worry about the safety and legitimacy of the companies. Just as with anything it is important that you make certain that the online lender you choose to work with provides a secure service and provides the loan that they advertise.
Tips on Finding Safe Online Lenders
Before you apply for a business loan, do some research on potential lenders. The internet gives you the tools you need to apply for a quick loan, and it also enables some quick research. These tips help you evaluate the security of any online loan application that you might consider.
- Look for a physical address: verify the address with a quick Google search to make sure they are real. Your search should uncover all sorts of press and information about any credible company.
- Research third-party verification of the lender: check the lender’s website and other sources for third-party information about any credible company.
- Look for reviews from business owners: you cannot use reviews to form your entire opinion about the lender but it does help. It can help guide your further research into the company.
- Check the website’s ownership: you can perform a WHOIS check within seconds. This will tell you who owns the site and how long the site has been around. This can give you insight into the actual nature of the organization that runs the site and if they are truly an online business lender.
- Be wary of lead gatherers with no loans: aggressive lead gatherers are a big threat to privacy and these people disguise themselves as business lenders. The actual intent is simply to gather information to sell to any number of lenders around the country. In order to safely and privately access the funds you need; you’ll probably want to start at the actual lender and not a lead gatherer.
Considering Online Business Lending
Online lenders might provide the right type of solution for your business. Some benefits could include fast or even instant decisions and fast funding. For many business owners, online lending can be a much quicker and more accessible solution than traditional banks, small business credit cards and other funding sources. If you do your own due diligence and choose a secure lending platform, you’re likely to be satisfied with your decision to borrow from an internet lender.
How to Apply for Online Business Loans
The application process varies by lender but there are a few main steps that you should take when you apply for an online business Loan. The following will be required when you begin the application process:
- Legal name and business name
- Personal and business contact information
- Business tax ID
- Social Security number
- Income/revenue information
The lender will require the applicant to submit documentation. Initial documents might include bank statements and financial statements. If you are seeking a larger loan, additional information and documentation may be required.
After submission, the application will go through the lender’s approval process. For certain types of loans, approval could be instant. With other loans, such as SBA loans, more time may be required. The lender may also require additional documentation or a phone call to verify information.