With so many startups and small businesses springing up, it's no wonder why there's a sudden boom of entrepreneurs who apply for small business loans online with groundbreaking fintech companies and U.S. peer-to-peer lending sites.
These online lenders offer unique advantages as well as a couple shortcomings that you definitely need to know about in order to make an informed decision when you are ready to take your business to the next level and apply for small business loans online.
Here some things to consider for business financing success...
Are You Sure a Business Loan Suits You Better Than a Personal Loan?
Depending on the size of your business and current success level, you may opt for a loan specifically designated for business. Some small startups have found an advantage in getting funded for a personal loan that gives them the freedom to use part of the money on their business and the rest of it on whatever they'd like to use it on. In a sense, a personal loan like Avant offers gives you more freedom to allocate funds to whatever you see fit. The disadvantage to Avant loans is that their personal loans limit you to receiving $35,000. For some small businesses that is more than enough, but for others that's not even enough to make them spend 5 minutes applying for such a small loan. After approval, they'd still need more so why bother?
For the big businesses that need far more than $35,000 Lending Club's business specific loans fit the bill far better. Yes, Lending Club offers personal loans as well, but in March of 2014 they started offer business loans that allow you to get up to $300,000 to grow your business. The great part about this is that the application process is just as quick and easy. Also, like the personal loans, checking the rates that they offer you does not effect your credit at all.
Lending Club has funded more than $11 billion in loans since their peer-to-peer lending site was founded in 2007. About 70% of Lending Club’s borrowers use their loans to refinance existing debt, such as credit cards or student loans. Now that business-specific loans are being offered it's expected that they will continue having great success in helping businesses grow as they fund billions to U.S. businesses that need financial flexibility and liquidity.
- How to qualify a Lending Club business loan online: You must own at least 20% of the business, you must have been in business for at least 2 years, your business needs to have at least $75,000 in annual sales, and have fair or better personal credit. If you apply for a business loan of $100,000 or greater you'll also need collateral, and borrowers must personally guarantee loans less than $100,000.
- The Cost of The loans: Lending Club charges 8% to 32% APR on its small-business loans, which includes a one-time origination fee of .99% to 5.99% (paid out of the loan proceeds). Your actual annual percentage rate will depend on your business’s financial strength, your personal credit score, the loan amount and repayment length.
- Speed of Funding: You can fill out an online application in as little as five minutes and pre-qualify. From there, you are presented with multiple business loan offers, and you can accept the loan option that best fits what you’re business need. You'll then need to provide a few legal documents to prove who you are and your relationship with the business to get your loan approved. The business loan approval and funding process typically takes around 7 business days.
- Repayments: Lending Club requires that your loans are scheduled for monthly payments and their loans carry repayment terms of 1 to 5 years. You’ll be required to set up automatic monthly deductions — ACH payments — from your bank account of choice. But you also have the option of paying by personal check, with a $15 processing fee per check. The business loan funding process is much faster than at banks. As with Prosper, Lending Club gives borrowers the option to repay the loan early to save on interest, with no prepayment penalties.
The Downside of Taking a Lending Club Business Loan
Don't apply for a small business loan online before knowing the good AND bad. Without a doubt, Lending Club offers very competitive rates on its loans and even though it is convenient to apply for a small business loan online, their loans are still slightly more expensive than traditional bank loans and SBA loans originated through SmartBiz (7% to 9% APR). And unlike bank loans that are available in every state, Lending Club doesn't service borrowers in Idaho and Iowa yet.
Finally, they aren't ideal for those seeking bad credit small business loans, fair to good credit borrowers have high rates of success compared to bad credit borrowers.
That's what we see as the disadvantages, it's important to know all the info before going for business financing. If a Lending Club business loan sounds like the right fit for your company, apply on the lender’s secure site, it takes 5 minutes to do.
Business Capital At Your Fingertips - Apply for Small Business Loan Online
As you can see, whether you have a promising startup in need of small business startup loans or an established small business in need of a bigger loan, there are options that cater to you. When you apply for small business loans online here’s what you stand to gain with Lending Club and Avant Loans: an easy and quick application process, a better shot at loan approval, fast small business loans (compared to the banks), reasonable interest rates and terms, a flexible repayment schedule. For many the ability to apply for small business loan online is dream come true.
If you don't know how to apply for a small business loan in traditional banks or just like the convenience of applying from home without being questioned by a banker click here to apply for a small business loan online with Lending Club or if you need $35,000 or less that can be used for business AND personal expenses apply for a personal loan from Avant Loans in less than 5 minutes.