Four Reasons Online Loans are Better than Traditional Bank Loans

6 Dec

Four Reasons Online Loans are Better than Traditional Bank Loans

So you own a small business and are looking to finance it. You have walked down to your bank, and the bank officer has said no. Now, what do you do? You have to look for an alternative.

There are credit unions, nonprofit microlenders, Small Business Association loans, peer-to-peer loans and of course, online personal loans. You need to research so that you can make an informed decision. The following are some reasons you should go for online borrowing:

1. The Loan Approval Process is Fast

Online lenders process loans fast, typically within 30 minutes. An online lender will almost immediately let you know if you are approved, how much you qualify for, and the loan installment payable. Traditional banks may take a little longer as a banker will have to assess your application and make a determination about your creditworthiness.

2. Online Lenders May Offer Cheaper Loans

Since they do not operate brick-and-mortar businesses, their overhead costs might be lower than for traditional banks. Additionally, such lenders do not pay the same regulatory fees payable by banks. That means they can share the savings from lower business operational costs with their customers.

3. Online Loans are Safe

Typically, online lenders do not require borrowers to provide collateral to be approved. If you are unable to continue servicing your debt for one reason or another, the lender will not repossess your car. Failure to pay may ruin your credit, but you can always resolve this when your financial situation improves.

4. With an Online Lender, You Can Expect an Easier Approval

Traditional lenders may not feel comfortable lending to you if your credit score needs serious improvement. Online lenders, too, care about your credit score but they may not be as “strict” as banks are. Additionally, they may consider other important information such as your utility payments to assess your ability to pay.

How to go About the Application Process

Beging by deciding with whom you want to do business. There are many legitimate online lenders you can use. However, there are some you should just avoid, such as those that do not offer installment loans. Consider asking fellow business owners, family, or friends for recommendations.

You should also do some online research on potential lenders before you make your decision. What are their customers saying about them in the reviews? After you decide on the lender to work with, fill out an online application, and if approved, you can expect the credit to hit your account in 3-5 days.

There are many sources of finance for your business. You need to comparison-shop to ensure you get the best deal you possibly can. And do not completely ignore your bank. Additional resources are available at the Northcash website.

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