Small business owners are opting for online loans instead of going to banks to secure funds. However, you should know that not all online lenders are made equal. You need to look out for those who offer solid financial options.
Here are some guidelines that will come in handy when looking for the best online lender for your business needs:
Eliminate Bad Debt
If you have a high-priced lender who is keeping you in an endless debt trap, you need to find ways to get out of it. You can do this by refinancing an expensive debt by securing a low-rate, long-term loan that will be cheaper and more affordable. Small Business Administration (SBA) loans usually have the lowest APR.
This means that you should opt for online marketplaces if you want SBA loans because they will work faster than traditional lenders. Moreover, these marketplaces will help you match your business to the right lender, giving you a place to start.
Look out for ‘too-good-to-be-true’ Offers
A legitimate lending company will offer transparent and reasonable terms to business owners.
When you see lenders advertising their rates with words like ‘as low as’, you should be weary to avoid falling into a trap. When you are in desperate need of capital, it is easy to take everything at face value, but you should not do that.
Whatever you do, you should not ignore the small details to make sure that you are getting what you expect. If you ignore minutiae, you could find the cost of your business loan going through the roof.
Get Your Affairs in Order
Once you decide to look for money, you need to make sure that your business records are in order before you kick start the borrowing process. This does not only refer to paperwork; you need to organize all aspects of your business. You should inspect your business plan and cash flow before you approach any lender.
How much money do you want to borrow? Which payments can you afford to make? Several low-cost and free resources are available to help you to figure everything out by yourself.
Research Your Options
When it comes to finding the best loan provider for your needs, you need to research. It is important for you as a small business owner to do your due diligence. Exploring the real substance of a lender means digging to see beyond the flashy websites and instant funding promises.
You need to look for a lender who offers single-digit rates of interest, verified online security, great customer service, as well as long loan terms. Make sure that you read online reviews on Google+ and ask potential lenders to point you to case studies that give you good feelings for the company.
Determine the APR
Dishonest lenders usually hide their terms with misleading prices instead of giving a true APR. The APR includes fees, loan terms, and interest rates. You need to focus on the APR if you want to compare lending options effectively.
The biggest advantage of online borrowing is that you can use many resources to figure out if you can afford a loan. For instance, you can find out here whether you qualify for a business loan. Make sure that you ask the lender plenty of questions if you need help figuring out the APR.
A small business loan should match your business needs perfectly as well as enable you to reach your growth goals. If you cannot find the perfect loan, you should keep looking until you find it. If a deal sounds too good to be true, it probably is.