Businesses need money in order to grow. Business loans are crucial for buying office space, purchasing inventory, and for buying IT equipment. But for some companies, getting approved for a business loan is easier said than done.
Typically large established companies have very little problem getting approved for a business loan. This is because they have a lengthy income history and a credit history, which makes them less risky in the eyes of a lender. But if you’re a startup or a small company, you’ve likely been unable to secure the funding you need.
The good news is that you’re not out of luck. There are tons of digital lenders out there that have more lenient loan requirements, allowing you to get the business funds you need in order to grow.
Here’s what you need to know about digital lenders and business loans.
What is a Digital Lender?
As the name implies, a digital lender is a lender that uses online technology to provide loans. Digital lenders are much more convenient and flexible when compared to traditional lenders as the entire loan application process is completed online. Through credit evaluations and other online data, a digital lender is able to quickly approve or deny a business loan.
While there are some traditional banks that offer online services, if you choose an online-only lender, there won’t be any local branch to visit. Instead, all applications, fund management, and communication will be done online.
Choosing an Online Lender
With the boom of the internet, today you’ll find that there are dozens of online lenders to choose from. In order to make the smartest decision for your business, you’ll want to ensure that you’re choosing the right lender. Here are factors to consider before choosing a digital lender and ultimately applying for a business loan.
Know What Kind of Loan You Need
There are all sorts of small business loans that you can apply for. In order to find the best online lender that meets your needs, be aware of exactly which type of loan best fits your situation. For example, if you’re buying business equipment, you’ll want to find a digital lender that offers an equipment loan.
By knowing the type of loan you require, you can easily weed out lenders that don’t offer the loan that you need.
We live in a world where consumers love to leave reviews about companies they’ve done business with, and digital lenders are no exception. When figuring out which lender is best for your company, take the time to read reviews and see what past and present customers are saying.
One of the most popular online-only banks to check out is CIT Bank, which offers high-yield savings accounts along with a variety of small business financing options including working capital loans, equipment financing loans, and even a loan for franchise financing. You can check out recent reviews of CIT Bank here.
Last but definitely not least, when choosing a digital lender, you’ll want to compare loan terms. See which lender offers the best terms in regards to application requirements, interest rate, loan amount, and loan fees. This is a quick way to narrow down your options and to find the business loan that offers the loan amount you need at an affordable interest rate and repayment term.
Benefits of a Digital Lender
One of the biggest benefits of choosing a digital lender as a small business owner is the fact that you can actually get approved for a loan! As a small business owner, you likely don’t meet the high qualifications to get approved for a traditional business loan. This is because traditional lenders are looking for a solid credit history, years of income, high inventory numbers, and a timeline of increased sales.
However, with an online lender, you’re much more likely to get approved. This is because online lenders are more willing to take high-risk borrowers. Just be aware that you’ll want to provide any and all documentation to show that your business is growing. It’s also beneficial to have a clear-cut plan of how the business loan funds will be spent.
Another benefit of a digital lender is that you’ll likely qualify for a business loan with more agreeable terms. If you were to get approved for a loan at a traditional bank, chances are that you’ll face all sorts of fees and of course a high rate of interest.
But, with an online lender, you’re much more likely to get a better loan rate. Digital lenders typically offer much lower interest rates because of their lower overhead costs. Online banks don’t have to pay the cost of maintaining a brick and mortar location, so these savings filter into lower interest rates and lower fees.
It’s no surprise that lending has also moved into the digital world. If you’re a small business looking to
secure a loan, consider working with an online lender that’s more willing to lend the dollars you need.