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When You Need Faster Approvals, An Online Loan is Your Best Option

Running a small business is like operating a small boat in a stormy sea. You may start off heading in the right direction, but, between the thrashing winds and the turbulent swells, your boat is lucky to stay afloat. Should a big wave come crashing down on you, you need to be bailed out now. For small business owners, it is difficult to anticipate all the forces coming at you that can take you off track, and, when the need for money arises, there is no time to wait. Bills have to be paid, payroll has to be met and supplies have to be purchased- and many small businesses are just one unpaid invoice away from a severe cash crunch. That’s why many business leaders can’t wait when there’s a need for a cash inflow through a lengthy application and underwriting process. Luckily, online small business loans can help.

It would be easy to advise small business owners that they should anticipate these situations and have a lender lined up for a short-term loan or business line of credit beforehand. However, the reality is most small businesses can’t qualify for a traditional loan under the strict qualification requirements set by banks. For businesses that do try to obtain a traditional loan, the process is so long and arduous, their business could go under before they know if they have been approved or not. Fortunately, business owners do have an option when they need to borrow money in an instant, and that is with an online lender.

Online Lenders Offer Quick Turnaround…

Since 2010, online lenders have grown in numbers and popularity by filling the vacuum left by traditional banks which all but abandoned the small business market. These non-bank lenders are not tied down by many of the lending and capital requirements that force traditional banks to avoid borrowers with less than perfect credit.  Instead of focusing solely on the credit history of the business owner, online lenders are able to utilize state-of-the-art data analytics to determine the credit risk of a business, even if it has been operating for only a year. That is how they are able to review a loan application, grant an approval and issue funding, all within a day or two.

But at a Cost

Online business loans are not inexpensive, but they are much cheaper than payday loans. The interest rates are based in large part on the personal credit scores of the business owners, but other factors are also considered, such as the business’ cash flow and its prospects for growth.  The annual percentage rate (APR) can range anywhere from 10% to more than 100%. Business owners with a personal credit score below 500 can expect to pay higher rates, from 40% to 110%, while credit scores above 600 might be worthy of rates between 10% and 40%. Loan amounts can range from $5,000 to $500,000 depending on the amount of revenue the business is generating. When possible, look at alternative platform lenders with a line of credit option that can help you control interest costs.

When You Need it Now

Aside from the easier qualifications for online business loans, the biggest advantage for business owners is the ease of the online application process and the quick turnaround on funding. Online loan applications typically take less than 10 minutes to complete and, with many lenders, approvals are granted within minutes, or a couple of hours at most.

Although quick access to cash comes at a higher price, keeping a business operating during an unexpected cash crunch can be worth the cost as long as there are enough profits to repay the loan. When a business is short the cash to pay the bills, its credit standing can be hurt, making it difficult to qualify for traditional financing down the road. For many small businesses, a quick turnaround online loan may be the best option to keep cash flowing, while protecting their good credit.

Peter Christopher

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