Love is truly blind, but entrepreneurs passionately in love with their own business dreams are perhaps the blindest of them all!
Take Jeremy Joseph for instance – a small business owner duped by an online financial firm in the urgency of wanting quick money – and he will tell you how wonderful it is to dream for the future, but how important it is to wake up when it comes to choosing a small business loan!
While community banks and merchant service providers still remain a trusted option catering to 60% of small business loans, the change is visible. Microloan financiers, crowdfunding sites and peer-to-peer (P2P) lenders are now clear options to small business owners.
Reputed online loan providers are popular with the I-need-the-money-now businessmen. But just how trustworthy are they? Let’s find out how best to choose an online small business loan provider.
- Check what they offer: Most of them are 100%-secure, offer a quick approval and overlook bad credit. This is what makes them popular with small businesses. But it is important to carefully go through their terms and conditions, preferably with a financial consultant in tow.
- Check what they require: Most of them require personal background statements, resumes, business plans, personal and business credit reports, tax returns, financial forecasts, bank statements and collateral legal documents. When compared to conventional banks, online loan providers are not very stringent on documentation because the risk that they take covers the interest rates that they charge.
- Check for authenticity: The best thing to do is to find a company that has an A+ rating with the Better Business Bureau or look for mentions in news channels like Bloomberg, CNBC and PBS. You could also check 3rd party review sites like TrustPilot to know whether the online lender has an Interim Permission number from the FCA.
- Choose the loan most appropriate for your business: There are a number of loan options for small businesses but choosing the right type depends a lot on what your business requirements are. For example,
- SBA (Small Business Administration) loans: These loans can be used to buy equipment, inventory, furniture and supplies.
- Line-of-credit loans: These loans can be used for inventory and operating costs but not for real estate.
Which brings us to an all-important question: Do online loan providers ever reject a loan applicant? Well, yes they do. Empty pockets and disorganized business plans could keep you from getting you your precious loan. So the smartest thing to do while applying for a short term loan online is to make sure you’re wide awake and familiar with all that it takes!