More and more SME owners are turning to
online lenders for their business loans, and there are some very good reasons
Possibly the biggest reason – the one
that leads to all the others – is that online lenders have built their
businesses to serve SMEs. They understand their customers, and their products,
application processes and approval systems are all designed to meet the needs
of small businesses.
So, what can you expect from an online lender?
Access to funds
Getting a bank loan as a small business
can be very tricky. Banks have a lot of requirements and don’t like to take
risks. If your business is too new or too small, if your credit rating isn’t
the greatest or if you have no assets to offer as collateral, the odds are you
won’t qualify for funding from a traditional lender.
Online lenders, on the other hand, are
much more flexible. Many offer unsecured loans to businesses that have been
trading for just six to twelve months. Some are happy to consider businesses
with less-than-perfect credit scores (some lenders even specialise in bad
The most important factor for any online lender will be your capacity to repay the loan. As long as you can show steady income, it’s likely that you’ll find a lender willing to consider your application.
If you’re imagining page after page of
complicated questions – and demands for everything from your full financial
statements to your firstborn child – think again.
Online lenders make it super easy to
apply for a loan. Most have a quick and easy online application form and ask
for little more than your ID documents and bank statements.
They may ask for electronic access to
your bank records – this may sound scary but it’s actually a good thing. They
will only have read-only access, and it means your application is assessed in
Bill Baker, CEO of Lend says “Capify was the first non-bank lender in Australia to offer unsecured business loans. Capify has been doing this for over 10 years now and continues to offer a great finance solution to business owners who are in need of finance to grow their business.”
Unlike banks, online lenders won’t
leave you hanging for weeks (or even months) while they contemplate your
application. Whether the answer is yes or no, you can expect to have it within
around 24 hours. In some cases, you may even get an instant, on the spot
And if your application is approved, settlement
will follow just as quickly. In fact, you could have the funds you need in your
account just 48 hours after submitting your application.
This could be crucial if you need funds to cover an urgent cash flow shortage or take advantage of a time-critical business opportunity.
Great customer service
In the highly competitive FinTech
market, online lenders work hard to attract and delight their customers. Many
are SMEs themselves and they understand that you don’t have the time or
resources to wade through red tape.
Even though you can quickly and easily apply for your loan online, most lenders will also offer you the support of a friendly human whenever you need it.
Last year, some of Australia’s top
alternative lenders worked with the Australian Finance Industry Association and others to develop our new Code of best practice lending principles. This was the first step towards
self-regulation and making sure that SME’s can get ‘clear, consistent and
accurate information’ about business loan products.
Lenders who are compliant with the new
Code – and Capify is one of them – use the new SmartBoxTM tool to provide information about all the loans
This provides information about each
product in the same format, making it very easy to compare the terms and costs
of business loans so you can make an informed decision about which loan best
suits your needs.
With so many compelling advantages,
it’s hardly surprising that more and more SME owners are turning to online
business lenders rather than traditional banks for business finance.
There is a cost, of course – unsecured
business loans are higher risk for the lender so you can expect to pay more for
your business loan than the rates high street banks offer.
You’ll need to weigh the costs against the advantages, so be sure to get professional financial advice before you apply for a business loan.
This article was supplied by Lend
Or call 1300 760 930 to speak with one of our friendly Lending Consultants now.