The forms of online lending for small businesses
October 25, 2018
Most of us assume that online lending is limited to payday loans and getting loan sharks from different companies. Online lending goes beyond getting cash advances or quick loans with high interest. The evolution of the industry has made it possible for small business entrepreneurs to receive financial opportunities at a low cost. It is this advancement that has brought a significant difference in the lending game.
As a business owner, you can now get access to credit from different forms of online lenders with minimal procedures. If a bank denies approving your loan, you can get one from online lenders who are more flexible, convenient and fast. Online business loans vary in how they operate.
One of the most affordable types is the longer term loan. Though this is a traditional type, it can help you secure a classic loan from online sources. The loan comes with favourable terms such as a suitable duration for you to pay it back.
It also has some interest rates that are a bit higher than what you initially borrowed. The interest rate ranges between 7-30%, but you can borrow a large amount. The payment may be weekly or monthly depending on what you agree with the lender. Your credit history, as well as the financial strength of your business, also affect the payment schedule. You can get this loan from lenders like Funding Circle, Bond Street or Lending Club.
There is also the option of the line of credit. This online lending form also comes with repayment terms as well as interest terms. You can get this loan from online sources at a faster rate compared to borrowing from a bank. The form works like a credit card since it allows you to pull the required cash and later pay interest on the amount you withdraw. It offers flexible financing and can save you when you need quick cash. You can borrow a line of credit from lenders such as Kabbage and OnDeck.
Do you need an asset-based loan? Consider getting equipment financing. If you need to start a business but don’t have the money to buy equipment, get this form. It provides you with new machinery for you to start the business. It could be in the form of some computers or specific machines you need to use while running the business.
The asset acts as collateral to cover the loan such that the amount of loan is equivalent to the price of the equipment you receive from the lender. Most lenders provide 8% interest rates and expect monthly repayments for you to keep the equipment.
Equipment financing is conducted online,thus, saving you the time of looking for appliances from the market. It also helps you start your business immediately without delays. Approach lenders such as Balboa Capital and Credit junction to get this form.
The diversity of online lending has improved the borrowing capacity of business owners. You should, however, shop around for you to get the best deals from a good online lender. Aim at receiving a good amount at affordable rates.