Online loans are a convenient way to get the capital your business needs. Whether you’re facing a cash flow problem or want to expand operations, there are numerous online lenders that can supply you with the funds you need.
But many business owners shy away from online loans for no good reason. Here are 5 myths about online business lending.
1. Approval is Long and Complicated
In the early days of online lending, the approval process was long and sometimes complicated. Now, getting approved is quick and easy. And funds are typically deposited into your account within 48 hours.
The application process typically involves filling out an online form and supplying the appropriate business documents or records. Depending on the size of the loan, you may need nothing more than just your good credit to get approved.
2. Online Loans are a Scam
Yes, there are scammers in the online lending industry, but there are also plenty of reliable and reputable lenders.
You’re far more likely to run into scammers if you take out a payday loan – the easiest type to be approved for online. But lenders that offer installment loans or small business loans are more likely to be legitimate.
That said, it’s still important to do your due diligence. Learn as much as you can about the lender, their reputation, and the terms and conditions of the loan. Check to see what other people are saying about the lender.
Did they have good experiences, or do you see multiple people complaining about the same issue?
The bottom line: Make sure you understand what you’re getting into before you sign on the dotted line.
3. I Need a Solid Business Plan to be Approved
Online lenders rarely ask for business plans. They have one main concern: Is your business generating enough revenue to cover the cost of your monthly payments? If so, it really doesn’t matter what your business plan looks like.
If you’re applying for a traditional business loan or a loan through the Small Business Administration, that’s a different story. These types of loans do require a solid business plan. But online lenders only want to know that you have the money to pay them back.
4. Online Lenders Won’t Work with Me on Payments
A reputable, quality lender will work with you on payments – regardless of whether they’re an online lender or conventional lender. This may mean adjusting the due date of your payments, or deferring payments for a set period of time.
Contact the lender to discuss what your possible options are if you have trouble making payments. Check online reviews, too, to see what borrowers are saying. Before you commit to taking out the loan, read the fine print to learn more about late payments and what it will cost you.
5. It’s Hard to Get Approved for an Online Loan
Getting approved for an online loan isn’t as difficult as it once was. Some lenders approve applications in as little as 24 hours. Good credit will speed up the approval process, but it’s really about your business’s performance. If your company is generating enough revenue, it really doesn’t matter what your credit score is like.