Small Business Loans: When Should you Go Online?

Small Business LoansIt’s a popular scene from the movies: a struggling entrepreneur decides to start his first business. He knots his best tie, slicks his hair back, and eagerly heads down to the local bank. The bank’s manager seems thrilled with the entrepreneur’s idea and gives him an envelope full of cash to fulfil his business dream.

Unfortunately, this perfect reality only exists in movies. In real life, it’s a different story.

For a small business, the bank isn’t always the best option. Thanks to the Internet, you can apply for personal business loans online. But just because it’s more convenient, doesn’t mean it’s THE solution to your business’ needs. Online loans can cost more compared to bank loans but for some situations, it’s necessary.

Scenario 1: Bank Loan Rejection

Some small businesses manage to survive a bank’s exhaustive loan application. Their victory, however, is short-lived when the bank rejects them during the last step. Reasons for rejection include the following:

  • Blemished credit report
  • No sufficient collateral
  • Lack of ability to meet time-in business requirements
  • Operating in industries traditional banks cannot service

You’re not alone in the struggle. Most small businesses also encounter these factors, resulting in their rejection. But with online loans at hand, you need not worry further. Unlike the traditional bank’s requirements, online business loans are not as severe and give you more flexible options.

Scenario 2: Need Money Now

Businesses will always encounter short-term cash constraints along the way. It’s odd to see start up owners overspend, but it happens. To compensate, entrepreneurs resolve to quick loans. But since traditional banks take time to approve loans, it’s not an ideal solution for most small businesses.

Online lenders, on the other hand, can approve your loans within an hour and you receive the cash within a few days. Just make sure to strike a plan to pay off these loans immediately to avoid further constraints.

Starting your loan search at the bank is still a good first step, but if you’re all for convenience or immediate cash, going online is your best bet.