Everyone knows that you can get business loans at a bank or other financial institution, but did you know that you can also get them online? Online business loans give you the opportunity to apply for a loan without ever leaving the office or your home. Here’s how to find funding that’s perfect for you.
Small Business Administration
The first place to stop when you’re looking for a loan is the Small Business Administration. This organization is perfect for companies that are looking to start or expand an already existing business. There are many different types of loans available including startup and expanding loan programs, disaster loans, expert assistance loans, veteran and military community loans, and special purpose loans. You may be surprised by all the types of programs offered by the SBA with affordable repayment plans and low interest rates.
Online business loans often categorize loans based on the age of a business. This allows lenders to decide how risky it is to offer a loan and allows the financial institution to determine the correct interest rate. Some online business loans aren’t available to companies that have been in business less than a year.
However, some lenders, like Fundbox, are willing to offer funding to new businesses that need a little extra money this year for research and development, product, or to just make it to the next quarter.
Like any loan, your business’s monthly revenue will come into play. The more money you make per quarter or annually means that you can get a much larger amount. Additionally, it’s much less risky to offer money to a company that makes enough revenue because these businesses are more likely to pay back the loan in full without issues.
Revenue can be a problem with some companies if they make a small amount, but some lenders specifically offer loans to businesses with low income. One such company is Prosper, which offers loans to small businesses that make over $2,000 per month.
Any online business loan is a risk since you may not know who the lender is or if there are hidden terms that could make it hard to repay the loan. Before you accept a loan, there are some things you should take into consideration.
- Terms of Repayment: Online lenders provide business owners with plenty of repayment terms. Before you accept any loan, you should be entirely sure of the way you’ll pay back your debt. The methods vary, so check if the amount will be a fixed amount each month or if the payments are variable.
- Interest Rates: The interest rates of each online lender will be different and vary widely based on your business’s age and revenue. Online business loans also tend to have a higher interest rate than in-house financing, so keep this in mind while you search.
- Security: Applying for a business loan online requires you to furnish sensitive data, such as your Social Security number, business information, and bank account details. Look for encryption and other security measures before you complete an application.