It’s no secret that starting your own business is a struggle. Fifty percent of all businesses fail within five years, and 70 percent fail within 10 years.
There’s no guarantee that your businesses won’t be part of either of these groups. That shouldn’t keep you from pursuing your dreams, though.
The reason many businesses fail is that they lack cash flow. If you can finance your business, you’ll have a much greater chance of succeeding.
Unless you happen to have a rich and generous father, chances are you’re going to need to apply for a business loan to get your business up and running.
Listed below are some tips that will help you find the best online business loan to fund your startup.
Benefits of an Online Business Loan.
Why should you look into online business loans? What’s the benefit of searching online compared to applying for loans from a traditional bank or credit union?
There are a few benefits that come with applying for online business loans, including the following:
- Save time
- Easy application process
- Easy to compare rates and terms
- Fast turn-around time (often less than 24 hours)
- Fewer hard credit checks
As you can see, there are lots of perks you can enjoy when you apply for business loans online.
Online lenders tend to offer better interest rates and terms, too, so you can get a great loan even if you don’t have stellar credit or lack a long credit history.
Finding the Best Online Business Loan.
Okay, you’re convinced that online business loans can be pretty cool. But, how do you go about getting these great online business loans? What should you be looking for to make sure you’re getting the best rates and terms possible?
Here are some guidelines that will help you sort through all the different online lenders out there and find the best loans for your startup:
Understand Types of Business Loans.
First, make sure you understand the different types of business loans that are available to you.
The most common types of business loans are as follows:
- Term Loans: These provide you with a lump sum that must be paid off, with interest, within a specific time frame.
- Business Lines of Credit: These provide you with access to a line of credit you can borrow against as expenses arise.
- Equipment Loans: As the name suggests, these loans are designed to help you cover the cost of new equipment your business needs to grow.
- Business Credit Cards: They’re not technically a loan, but these are a good financing option for some business owners, and they may also come with additional perks and incentives.
Which type of loan makes the most sense for your business? Be sure to consider this before you apply.
Consider Your Goals.
If you’re having a hard time figuring out which type of loan you should apply for, think about your goals for the business.
Why do you need the money? Do have pressing needs and expenses? Or, do you just want to have access to money as needs arise?
Consider the Nature of your Business.
Be sure to consider the nature of your business, too.
If you are in a seasonal business, for example, a line of credit can be a good option so that you have money to draw from during slow seasons.
A lump sum term loan might not be ideal, though, since you might not always have the capital necessary to make the payments.
Compare Loan Requirements.
Once you’ve decided what type of loan you need, you’ll have to compare different loans from different lenders to see which one offers the best rates and terms.
Be sure to also pay attention to the loan requirements and how they vary from lender to lender.
What is the minimum credit score required? What kind of deposit do they require? Do you need to look for no credit check loans because your credit history hasn’t yet been established?
When Do You Need the Money?
Finally, be sure to consider when you need the money.
The great thing about online loans is that you can usually get the money you need very quickly.
Be sure to look into the average amount of time it takes for the money to be deposited into your account before you agree to a particular loan, though.
This will help you make sure you have the funds needed when you require them.
Tips for Getting Approved.
Consider all of these guidelines when you’re applying for an online business loan. They’ll help you sort through the different options and choose the right one for your business.
Improve Your Credit Score.
The better your credit score, the easier it will be for you to get approved for a loan. Make sure that both your business credit score and your personal credit score are as high as possible. For startups, lenders will often look at your personal credit score since you don’t have a long credit history.
Have Sufficient Cash Flow.
Often, you are required to make a down payment (which can be anywhere from 20-25 percent of the loan amount) when you’re applying for a business loan. Be sure to plan for this and have that cash ready to increase your chances of getting approved.
Know Your Risk Profile.
Some businesses are riskier than others. If your business has a high-risk profile, you may have a harder time getting approved for a loan.
Be sure to understand the risk associated with your business and how lenders see it before you start applying for loans. This will help you make a better case for yourself.
Need More Business Help?
Clearly, there are lots of options out there if you want to apply for an online business loan. Keep these guidelines in mind so you can find the best loans to fund your startup.
Do you need more help getting your business up and running?
Whether you need help with managing employees, managing your time, or boosting sales, we’ve got resources for you.
Check out some of the articles in the Professionalisms section of our site today to learn everything you need to know about starting a business and keeping it going long-term.
