Working Capital

How to get an Online Business Loan That’s Fast and Flexible

If you need to quickly borrow money for your growing business, an online lender might be your best option. They can usually get your money to you faster than a traditional bricks-and-mortar bank, and that’s crucial.

As part a growing trend in finance, many small business owners and entrepreneurs are now turning to online lenders for money instead of community banks. For those who want to apply for loans online, Canada is very much a part of this quickening transition.

While small business financing has been limited to in-person applications for decades, today’s financial innovations allow you to get a small business loan in Canada with just one click. And reliably so.

Despite stereotypes, most online loan providers run a tight ship, so if you apply with a trusted, verified company, you can rest easy and know you’re in safe hands.

If you’d like to begin exploring your options, start by getting familiarized with the world of alternative finance business loans.

How Fast Can You Get A Business Loan

No lender offers a personal guarantee that you’ll get what you need to plug a gap in your finances, but online lenders can make a decision faster than traditional bankers.

For small business funding in particular, it has been difficult in the past to acquire loans from big banks through established processes:

"Many big banks avoid extending credit to small companies because small business loans are time intensive, hard to automate, tough to securitize, and expensive to underwrite and service."

   –  SCOTT SHANE| Entrepreneur.com 

Equally, smaller community banks are in rapid decline, which hurts small business further. For Canadian entrepreneurs and startups, these have been the staple provider of loans in the past when there was nowhere else to turn, but now they’re quickly becoming insufficient. In addition to the fact that many of these lenders require a personal guarantee, community banks may not be the ideal choice for a business loan.

It’s no surprise, then, that small business owners are increasingly turning to lenders for fast online business loans that attend to their specific predicament.

Trusted Online Loan Types in Canada

A 2014 working paper by Karen Gordon Mills (Senior Fellow at Harvard Business School) and Brayden McCarthy called The State of Small Business Lending recognizes that online lending is growing fast.

They state there is an “emerging, dynamic market of online lenders that are using technology to disrupt the small business lending market,” and loans from these providers come in different shapes and sizes.

Here are a few of the available loan types you should consider for your business needs:

As the name suggests, P2P lending is about asking your peers, rather than a financial institution, for financial help. “Peers” could be wealthy individuals who like your business model and are willing to invest in it for the sake of humanity, or plainly, investors who are seeking to make a profit.

The peer match is found online through a platform that’s much like a dating website. The match-making model has proven successful for romance, and online lenders believe it works for financial gain, too.

These matchmaking sites look at more than a basic credit score, as traditional lenders have done in the past. They consider many data points to make faster assessments for smaller loans.

For many small business owners, capital is tied up in the business. This can result in cash flow problems and therefore greater difficulty in trying to secure a loan from traditional sources. Especially if they are trying to avoid personal guarantee.

If earnings for your company are steady and growth is predictable, online lenders can often help you overcome a cash flow problem. Ordinarily, this is for growing companies that want to expand into new markets or acquire other assets.

Providing your financial records are healthy, a cash flow lending agreement could see you past the next hurdle to grow your business beyond its current limits.

As your small business continues to grow, there may be times when you need a loan and times when you’re swimming in profits. For many, the gap that appears between the black and red on a credit statement can be fleeting and sporadic.

If you need assistance managing this gap swiftly, traditional loans won’t do. They’re simple not readily available and flexible enough. Instead, you might want to consider a line of credit.

A line of credit loan means you are essentially given the option to dip into a set loan amount as and when you need it. So long as you don’t cross this line (i.e., spend more than you are allowed to within the terms of the agreement), the balance of the loan can move easily up and down. You only pay interest on what you use.

By loaning money in this way, online lenders demonstrate their ability to better suit the fluctuating finances that often limit small businesses.

Growth in business crowdfunding and P2P lending shows that small business owners are finding more effective ways to borrow money for short-term gain than traditional bank loans. The evident disruption to age-old banking methods is clearly making its mark.

Online business loan approval is not 100% guaranteed. So, it is important to remember that online loans are not easier to acquire, just more convenient.

We help small business owners navigate cash flow hurdles every day. Sign up in just 3 minutes and receive a credit limit approval within a business day.

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