What are Online Business Loans?

As traditional lenders tighten their credit standards, an increasing number of business owners are turning to online business loans for their financing needs. This new breed of lenders, operating entirely online, offers a faster, more accessible alternative to the lengthy approval processes and stringent credit requirements of traditional banks.

Fueled by web-based tools, online lenders can evaluate loan eligibility in minutes and approve a greater volume of loans than traditional financial institutions. This allows businesses to secure financing more quickly, without the time-consuming paperwork and long waiting periods associated with conventional bank loans.

How Do Online Business Loans Work?

Online business loans are similar to traditional loans, but with one key difference: they use modern technology to streamline the application and approval process. Most online lenders use automated systems that analyze your business’s financials, cash flow, and credit card receipts, among other factors, to determine loan eligibility. This means that you can apply and get approved in a fraction of the time it would take with a traditional bank.

The loan amounts, terms, and eligibility criteria vary by lender, but the key benefit of online business loans is the speed and convenience they offer. Whether you need short-term working capital or long-term financing for expansion, online lenders can provide the funds you need quickly and with less hassle.

Benefits of Online Business Loans

• Faster Approval and Funding: Online lenders can approve and deposit funds into your account much quicker than traditional banks, often in as little as 24 to 48 hours.

• Simplified Application Process: The application process is online, often requiring just a few documents to verify your business and financial information.

• Flexible Terms: Online business loans offer flexible terms and repayment schedules that can be customized to your business’s cash flow.

• More Accessible: Online lenders typically have less stringent eligibility requirements, making it easier for businesses with lower credit scores or limited operating history to qualify.

Types of Online Business Loans

Online business loans come in various forms, each suited to different business needs:

• Short-Term Loans: These loans are typically used for urgent, short-term needs, such as working capital or inventory purchases. They usually have shorter repayment periods (ranging from three to 18 months).

• Long-Term Loans: Ideal for larger projects or business expansion, long-term online loans usually offer more substantial amounts and longer repayment terms (ranging from one to five years).

• Lines of Credit: A flexible loan option that gives businesses access to a set amount of credit, which they can draw from as needed, making it ideal for businesses with fluctuating cash flow needs.

• SBA Loans: Some online lenders offer SBA-backed loans, which come with lower interest rates and longer repayment terms but require more documentation and a longer approval process.

How to Qualify for an Online Business Loan

Qualifications for online business loans vary by lender, but generally, you’ll need to meet the following criteria:

• Time in Business: Most online lenders require at least 1-2 years of business operations.

• Annual Revenue: Lenders typically require a minimum annual revenue, which can range from $50,000 to $250,000, depending on the loan amount and lender.

• Credit Score: Many online lenders are more lenient with credit scores than traditional banks, but a minimum score of 500-650 is usually required, depending on the loan type.

• Business Financials: Lenders will often ask for financial statements, including profit and loss reports, bank statements, and tax returns to assess the health of your business.

Online Business Loans vs. Traditional Loans

Should You Choose an Online Business Loan?

An online business loan is an excellent option for businesses that need quick access to capital. If your business faces a short-term cash flow gap or needs immediate funds for expansion, an online business loan can provide the financial flexibility you need without the red tape of traditional lending. However, it’s important to weigh the costs carefully, as online business loans can come with higher interest rates compared to traditional loans.

For business owners with less-than-perfect credit or those who need financing quickly, online lenders offer a faster and more accessible way to get the funds needed to keep their business moving forward.

Conclusion

What are Online Business Loans?

As traditional lenders tighten their credit standards, more and more business owners are turning to online business loans for their financing needs. This new breed of lenders, operating entirely online, offers a faster, more accessible alternative to the lengthy approval processes and stringent credit requirements of traditional banks.

Fueled by web-based tools, online lenders can evaluate loan eligibility in minutes and approve a greater volume of loans than traditional financial institutions. This allows businesses to secure financing more quickly, without the time-consuming paperwork and long waiting periods associated with conventional bank loans.

How Do Online Business Loans Work?

Online business loans are similar to traditional loans, but with one key difference: they use modern technology to streamline the application and approval process. Most online lenders use automated systems that analyze your business’s financials, cash flow, and credit card receipts, among other factors, to determine loan eligibility. This means that you can apply and get approved in a fraction of the time it would take with a traditional bank.

The loan amounts, terms, and eligibility criteria vary by lender, but the key benefit of online business loans is the speed and convenience they offer. Whether you need short-term working capital or long-term financing for expansion, online lenders can provide the funds you need quickly and with less hassle.

Benefits of Online Business Loans

• Faster Approval and Funding: Online lenders can approve and deposit funds into your account much quicker than traditional banks, often in as little as 24 to 48 hours.

• Simplified Application Process: The application process is online, often requiring just a few documents to verify your business and financial information.

• Flexible Terms: Online business loans offer flexible terms and repayment schedules that can be customized to your business’s cash flow.

• More Accessible: Online lenders typically have less stringent eligibility requirements, making it easier for businesses with lower credit scores or limited operating history to qualify.

Types of Online Business Loans

Online business loans come in various forms, each suited to different business needs:

• Short-Term Loans: These loans are typically used for urgent, short-term needs, such as working capital or inventory purchases. They usually have shorter repayment periods (ranging from three to 18 months).

• Long-Term Loans: Ideal for larger projects or business expansion, long-term online loans usually offer more substantial amounts and longer repayment terms (ranging from one to five years).

• Lines of Credit: A flexible loan option that gives businesses access to a set amount of credit, which they can draw from as needed, making it ideal for businesses with fluctuating cash flow needs.

• SBA Loans: Some online lenders offer SBA-backed loans, which come with lower interest rates and longer repayment terms but require more documentation and a longer approval process.

How to Qualify for an Online Business Loan

Qualifications for online business loans vary by lender, but generally, you’ll need to meet the following criteria:

• Time in Business: Most online lenders require at least 1-2 years of business operations.

• Annual Revenue: Lenders typically require a minimum annual revenue, which can range from $50,000 to $250,000, depending on the loan amount and lender.

• Credit Score: Many online lenders are more lenient with credit scores than traditional banks, but a minimum score of 500-650 is usually required, depending on the loan type.

• Business Financials: Lenders will often ask for financial statements, including profit and loss reports, bank statements, and tax returns to assess the health of your business.

Online Business Loans vs. Traditional Loans

Should You Choose an Online Business Loan?

An online business loan is an excellent option for businesses that need quick access to capital. If your business faces a short-term cash flow gap or needs immediate funds for expansion, an online business loan can provide the financial flexibility you need without the red tape of traditional lending. However, it’s important to weigh the costs carefully, as online business loans can come with higher interest rates compared to traditional loans.

For business owners with less-than-perfect credit or those who need financing quickly, online lenders offer a faster and more accessible way to get the funds needed to keep their business moving forward.

Conclusion

What are Online Business Loans?

As traditional lenders tighten their credit standards, more and more business owners are turning to online business loans for their financing needs. This new breed of lenders, operating entirely online, offers a faster, more accessible alternative to the lengthy approval processes and stringent credit requirements of traditional banks.

Fueled by web-based tools, online lenders can evaluate loan eligibility in minutes and approve a greater volume of loans than traditional financial institutions. This allows businesses to secure financing more quickly, without the time-consuming paperwork and long waiting periods associated with conventional bank loans.

How Do Online Business Loans Work?

Online business loans are similar to traditional loans, but with one key difference: they use modern technology to streamline the application and approval process. Most online lenders use automated systems that analyze your business’s financials, cash flow, and credit card receipts, among other factors, to determine loan eligibility. This means that you can apply and get approved in a fraction of the time it would take with a traditional bank.

The loan amounts, terms, and eligibility criteria vary by lender, but the key benefit of online business loans is the speed and convenience they offer. Whether you need short-term working capital or long-term financing for expansion, online lenders can provide the funds you need quickly and with less hassle.

Benefits of Online Business Loans

• Faster Approval and Funding: Online lenders can approve and deposit funds into your account much quicker than traditional banks, often in as little as 24 to 48 hours.

• Simplified Application Process: The application process is online, often requiring just a few documents to verify your business and financial information.

• Flexible Terms: Online business loans offer flexible terms and repayment schedules that can be customized to your business’s cash flow.

• More Accessible: Online lenders typically have less stringent eligibility requirements, making it easier for businesses with lower credit scores or limited operating history to qualify.

Types of Online Business Loans

Online business loans come in various forms, each suited to different business needs:

• Short-Term Loans: These loans are typically used for urgent, short-term needs, such as working capital or inventory purchases. They usually have shorter repayment periods (ranging from three to 18 months).

• Long-Term Loans: Ideal for larger projects or business expansion, long-term online loans usually offer more substantial amounts and longer repayment terms (ranging from one to five years).

• Lines of Credit: A flexible loan option that gives businesses access to a set amount of credit, which they can draw from as needed, making it ideal for businesses with fluctuating cash flow needs.

• SBA Loans: Some online lenders offer SBA-backed loans, which come with lower interest rates and longer repayment terms but require more documentation and a longer approval process.

How to Qualify for an Online Business Loan

Qualifications for online business loans vary by lender, but generally, you’ll need to meet the following criteria:

• Time in Business: Most online lenders require at least 1-2 years of business operations.

• Annual Revenue: Lenders typically require a minimum annual revenue, which can range from $50,000 to $250,000, depending on the loan amount and lender.

• Credit Score: Many online lenders are more lenient with credit scores than traditional banks, but a minimum score of 500-650 is usually required, depending on the loan type.

• Business Financials: Lenders will often ask for financial statements, including profit and loss reports, bank statements, and tax returns to assess the health of your business.

Online Business Loans vs. Traditional Loans

Should You Choose an Online Business Loan?

An online business loan is an excellent option for businesses that need quick access to capital. If your business faces a short-term cash flow gap or needs immediate funds for expansion, an online business loan can provide the financial flexibility you need without the red tape of traditional lending. However, it’s important to weigh the costs carefully, as online business loans can come with higher interest rates compared to traditional loans.

For business owners with less-than-perfect credit or those who need financing quickly, online lenders offer a faster and more accessible way to get the funds needed to keep their business moving forward.

Conclusion

As traditional lenders become more cautious, online business loans offer an alternative that’s fast, flexible, and often more accessible. Whether you need quick funding for inventory, a new marketing campaign, or long-term capital to expand your operations, online lenders can provide the necessary funds with less hassle. At Vice Funding, we help you compare the best online loan options for your business, enabling you to make an informed decision about your financing needs.

Many online lenders use technology to evaluate businesses differently from traditional lenders. For example, online lenders may access a business’ transactions and cash flow via their bank account’s website or examine other digital data points to analyze a business.

What is an Online business loan?

An online business loan is a source of funding that businesses can apply for and access via online lenders. Online business loans are useful options for small businesses in particular, because the application process is easier, and approval time can be shorter than traditional business loans.

Shorter Term Online Business Loans

This lender provides business owners with loans ranging from three to 24 months. These loans are often used for specific, shorter-term projects such as purchasing inventory, launching marketing campaigns, or general working capital. Some examples of shorter-term lenders are:

• OnDeck – works largely with “Main Street” businesses and offers loans of up to $250,000. OnDeck has loaned over $3 billion nationwide.

Longer-Term Online Business Loans

These lenders provide business owners with loans that range from 1 to 5 years with amounts up to $500,000. These loans are often used for longer-term projects such as major renovations or the opening new location. Some examples of these longer-term lenders are:

• Funding Circle – started in the U.K. and has lent over $700 million globally to small businesses; Funding Circle offers loans up to $500,000

Benefits of Online Business Loans

Online business loans present some benefits over traditional loans, including:

• Easier application process
• No need to go into a physical bank or lender’s office
• More options so business owners can choose the online business loan that best suits their business needs
• Flexible terms and repayment options
• Faster approval and access to funds

Best Uses for Online Business Loans

Online business loans can be used for a number of business needs, including:

• Working capital to cover operational and other expenses
• Cash flow to cover payroll or one-time gap payments
• Equipment purchases
• Technology or infrastructure investment
• Inventory scaling or purchasing
• Refinancing
• Real estate purchasing

Online Business vs. Traditional Business Loans

Online business loans are distinct from traditional loans in several ways, many of which are favorable for businesses, particularly small businesses, but there are some watch-outs.

Online Business Loans

• Flexible qualifications and terms
• Easier to qualify
• Quicker to get approved and get access to funds
• Streamlined underwriting process
• Higher fees and interest

Traditional Loans

• Require more documentation and collateral in most instances
• Specific qualification requirements
• More rigid underwriting process
• Potentially lower fees and interest

How to Choose the Right Loan For Your Business?

Choosing the right loan for your business will depend on several variables, including:

• How long you have been in business?
• Your business credit profile
• The financial health of your business
• How much money you need?
• What do you plan to use the funds for?
• Whether you have existing loans or other debt
• What repayment terms are you comfortable with, including time to repay, interest, and fees?

Services like BusinessLoans.com can help you compare what business loans are available to meet your needs and qualifications.

Rates & Repayment

Online business loans tend to have a higher interest rate relative to traditional bank loans. However, they also have much higher approval rates and can provide funding far quicker than traditional lenders. The rates will vary by lender, term, and risk and are typically lower than other options such as merchant cash advances. Repayment methods also vary depending on the lender, so make sure to do your research and find the best fit for your business. Some lenders require a fixed amount daily or weekly, while others require a traditional monthly payment.

Qualifications and Requirements for Online Business Loans

These both vary from lender to lender, but here are some general guidelines:

• Required Time in Business: Usually between 1-2 years
• Minimum Annual Revenue: $75,000 – $250,000
• Minimum Personal Credit Score: 500-650
• Industry: Industry requirements vary by lender, but restricted industries sometimes include financial services, home builders, real estate investors, etc.

The Best Online Business Loan Options

The type of business loan that’s right for your business will take into consideration the above factors as well as what lenders will approve your application. Some of the best online business loan options are:

• Fundbox: Loan amounts up to $150K with a minimum credit score of 600
• Funding Circle: Loans up to $500K with credit scores of 660
• Bluevine: Loans up to $250K with a credit score of 620 or up
• Ondeck: Loans up to $250K with a credit score of 600 or up

Application Process

A major benefit of online business funding is how easy it is to apply for a loan. Applications are usually just a single page and tend to be very straightforward. They can be completed online, over the phone, or via fax. However, there are certain things you’ll need for non-bank lenders, including:

• Your Social Security Number
• Your Business Tax ID
• Connection to your business bank account or paper bank statements (for certain lenders)
• Financial statements (typically for larger loan sizes)

Another advantage to working with online lenders is the quickness of their review process. The shorter-term lenders can often provide a decision in minutes or hours, while the longer-term lenders may have a decision within a few days. In a world where an application for financing in a traditional setting can take weeks or even months, the speed and simplicity offered by online business lenders are a major attraction for many business owners.