Are you desperately seeking working capital for your business? Do you need to buy inventory, invest in equipment, build a website, or hire staff? Well, you are in luck! Over the past several years, financial technology (fintech) innovators have been hard at work designing platforms that can help you get the working capital you need more quickly and easily. Need the credit line as soon as possible? Not a problem; fintech platforms are designed to provide prompt credit decisions and access to cash as quickly as a few minutes.
A Quick History of Business Lending: Why Fintech Levels the Playing Field
For years, small business owners had to rely on family and friends, personal guarantees, or pledged collateral to obtain a business line of credit. While the US Small Business Administration (SBA) does offer matchmaking and guaranteed business loan services, applying for SBA loans can be a time-consuming and paperwork-intensive process. For small business owners who need a relatively small loan (less than $250,000), the process of getting a small business loan can be more trouble than it is worth.
Banks have traditionally offered credit revolvers, credit lines, and loans to small businesses. Again, the application process can be time-consuming and regulations restrict lending to certain types of businesses. According to the Harvard Business Review, since the 2008 banking collapse, banks have become more conservative in their lending practices and small businesses are finding bank credit lines difficult to access.
Enter fintech. fintech companies realized that the small business community needed a better, faster, and more secure lending solution. Their goal: to build a system that makes applying for a business loan easier. Their solution: platforms that allow businesses to apply for a business loan online with results in minutes, rather than weeks.
Better, Faster Credit Access for Small Businesses
Online business lending is revolutionizing credit access for small businesses. Want to save a visit to the bank? Online lenders can save both the time and the travel. Instead of filling out forms by hand, online lenders allow borrowers to fill out one set of digital forms and submit them all from the comfort of their home or office. The elimination of paperwork saves time for both the lender and borrower and reduces the number of potential translation mistakes that can hold up the process.
Once your digital application forms have been submitted, fintech’s big data platforms get to work. Instead of waiting for a bank loan analyst to pour over all of the documents, online lenders can process and validate your business history in seconds. In addition, online lenders consider many business metrics that banks and other lenders do not. Widening the metrics lens allows lenders to become more comfortable with a borrower or business. Trust and validation allow online lenders to offer credit when other lenders cannot.
Online Lending Security is Tight
Online lending platforms are both easy to use and secure. Dominant lending platforms employ firewalls and 128-bit secure socket layer technology (SSL) for encryption. In addition, most platforms have deployed industry best practices and store all customer information on PCI-compliant and PA-DDS certified data centers. Rest assured, the data you enter will be safeguarded from online intrusion.
How to Apply for an Online Business Loan
Applying for a business loan is different than applying for a personal loan. Personal loans essentially require borrowers to submit a payment history (in the form of a credit score and history) and post collateral (such as a car, house, etc.).
Business loans are a different animal. Some lenders like banks, credit unions, and the SBA, require the submission of a business plan and several other in-depth planning documents to receive consideration for a business loan. Online lenders differ from traditional lenders since they have the ability to assess other business metrics. Instead of business plans, most online lending services only require that you link your registered digital profile (such as a bank account, bookkeeping software, or payment platform) and a financial overview to qualify. Unlike traditional lenders, online lenders approve businesses by looking at a variety of business data in real-time.
The fastest business credit decisions are offered by these online services. A business owner can create an account by entering information such as business name, address and phone number, company structure, industry type, federal tax ID and the date of company establishment. Once an account is created, you can then link a business bank account or other payment platform to establish your company’s financials. From there, the automated financial review process begins. Computers take the place of analysts and verify your data quickly and easily. If, for whatever reason verification cannot be made, online lenders also have customer support available.
Once the business verification stage is passed, the business owner must enter some personal information and agree to a hard inquiry credit check. If all accounts return valid results and identities are verified, the online lender will be able to return a credit decision result in as quickly as a few minutes.
Next Steps: How to Find the Best Loan to Fit Your Business
Online business lending services are becoming more popular and are giving business owners even more lending options to choose from. Depending on your credit needs, the desired duration of the loan, and your business’ specifics, one online lender may offer preferable terms in comparison to another. As the borrowers evolve and grow, so do the lending platforms. Keep a close eye on platform innovations and compare constantly so you can ensure that you make the best funding decision for your business.