Kicking off a small business idea and sustaining the same is not an easy task. From drafting a blueprint to getting things off the ground, meticulous planning is required.
Apart from a solid business plan, having deep pockets becomes a catalyst for unperturbed business operations. However, maintaining adequate cash flow becomes a challenge and financial crises are inevitable.
To this end, getting loans from traditional lending institutions such as banks and other individual lenders such as investors becomes vital to run your small business. But, getting loans approved from banking institutions becomes an issue when you have a low credit score or when the profit and loss statement is not strong enough. As a result, getting a loan application approved from a bank becomes impossible.
In light of these financing issues, online lending platforms are easing the small business funding landscape. Through these platforms, short-term or long-term loan, line of credit and other type of small business loans, with varying repayment periods, are available to borrowers. Each platform caters to different users and offers a lot of flexible features catering to business use. Here is a review of some of the online platforms with their offers in brief.
Listed in the USA, Ondeck is a technology-driven online platform that offers financial services such as small and medium-term loans for running businesses, besides other line-of-credit facilities.
- Term loans typically ranging between $5,000 to $500,000 and line of credit of up to $100,000 can be availed.
- The annual percentage rates (APR) of 9% to 99% for term loans and 63% for a line of credit (stipulated for quarterly changes) are applicable.
- Repayment facility on a daily basis or weekly for 3 months to a maximum of 36 months is provided.
- Loan application takes up to 10 mins to file through a telecall and if approved, funds are disbursed within 24 hours.
- Speedy access to loans through a convenient application process
- Leniency in credit score requirements as applicants with a score as low as 500 up to 600 can access the line of credit.
- Quick turnaround time of financing, saves a lot of time.
- Offers discounts on renewal of loans and lower pricing with each consecutive loan.
Based in Atlanta, Georgia, Kabbage is an online lending facility that offers a new and automated method for small businesses to access working capital loans to meet day to day expenses.
- Access to loans ranging between $2,000 to $250,000.
- The line of credit can carry a high-interest rate of 24% to 99%.
- Loan terms have a short repayment period ranging between 6 and 12 to 18 months.
- Provides a business line of credit facility that allows small business owners to withdraw loans whenever required until the credit limit exhausts.
- To apply for a loan, the company needs to have at least one year of business history or a history of $50,000 earned as revenue annually.
- The loan application process does not require the applicant to submit personal history documents. Access to funds is generally through a business checking account or through other payment platforms like PayPal.
- The online loan facility is available even to those applicants that have a bad credit history but are willing to pay higher interest rates.
Established in North Carolina, LendingTree is another online marketplace for business loans under which borrowers and lenders come together to decide on an arrangement for either a business loan or a personal loan. This means that pre-approved loan offers from multiple lenders are presented to applicants on a single platform.
- Access to different types of loan depending on the requirement. Personal loan, business loan, automotive loan, and student loan are some of the lending facilities available.
- On average, interest rate begins at 5%
- Repayment terms vary with respect to loan applied. It can be somewhere revolving around 6 months in case of a line of credit to up to 10 years in case a long-term loan is taken.
- Borrowers benefit immensely due to competition among lenders to offer competitive APRs.
- Loan not just from banks but from individuals’ investors, small companies, as well as other traditional lending sources, is available creating a gamut of funding opportunities to choose from.
Torro is a Nevada based small online market place that connects small business owners with a network of investors, lenders, and brokers. The place offers flexible business loan options that can be used by small business startups.
- Provides funds as small as $5,000 and up to $575,000
- APR rates vary depending upon specific loan provider but do not exceed about 36%
- Repayment terms of 12 months to 48 months for merchant cash advances
- Loans are provided without collaterals
- Loan applications can be processed without a business history and can proceed with just a solid marketing plan
Lendingclub, Funding circle, Fundbox, Smartbox, Street share are some of the other unique online lending platforms with varied financing functions. For instance, the Lending Club is a first of its kind market place which directly does not offer loans to borrowers but provides a comprehensive guide of which loans can be accessed in the market and at what APR. Therefore, it allows comparison shopping by giving a clear distinction as to which loan would be most suitable for your business scenario.
These fast and automated loan facilities are proving to be a major breakthrough in the traditional market place for lending as barriers such as low credit ratings and need for collators etc. are particularly taken care off. Being a businessman, relying on these mediums for getting loans is sure shot way to ensure continued business funding.