Start-ups are the backbone of the economy as they make a significant contribution and provide the jobs market with a growing number of new opportunities. There used to be a time when one of the main options for financing a start-up would be to visit the local bank. Now, banking can be done pretty much anywhere and it’s a lot easier, quicker and more convenient for businesses of all sizes to arrange their finances online. It is estimated that more than 100 million new businesses are launched worldwide every year, and a large percentage of these will have taken out business loans online because of the many benefits from doing so.
Smoother application process
With online business lending here, the likelihood of needing to fill out multiple forms and posting them is slim. Instead, you’ll be using online forms that can be filled much more quickly and once submitted, they can be reviewed immediately. The applicant can learn within hours, or even just minutes, whether their application has been approved or rejected. In many cases, funding will be transferred to the applicant in a matter of minutes or days.
Lending can now be highly automated and all parts of the process are more efficient than they were in the past, for most lenders. If a business loan application is rejected, the response is fast, and the business can simply review the rejection and apply elsewhere. A successful or rejected approval can be much quicker than it would have been with a paper application being printed, filled in and sent off to a bank for checking and consideration.
The global reach of the internet also means that businesses are no longer restricted to their local institutions. Instead, they can easily connect with banks all over the world and have much more choice when it comes to deciding which banks to get in touch with.
Statistics show that more than half of start-up businesses get rejected for a bank loan. Having a wide range of options online enables businesses to find a loan that is best suited to them and that they are likely to be accepted for. By going online, they can find banks that match their specific needs, which their local bank may not be able to do, and it doesn’t matter at all how far away the bank lending the money is.
Many institutions that aren’t banks, including online payment companies such as PayPal offer their own business loans, so applicants looking for business loans aren’t just limited to traditional banks. Other independent companies such as GetCapital also offer financial assistance to Small and Medium sized Enterprises around Australia.
More Informed Decisions
Thanks to advances in technology, there are many different ways in which alternative lenders can evaluate the creditworthiness of a business. Some of the many variables lenders look at include social media reviews, cash-flow reports, business cash flows and bureau scores. Lenders can therefore make better decisions about which businesses they provide loans to and those seeking business loans might stand a better chance of getting approval. This is because previously, banks would mainly be interested in collateral. Because creditworthiness is evaluated in a different way, more businesses may benefit.
These are just a few ways in which technology is changing everything to do with business loans. Improvements run from the application process and the way applicants are evaluated, to the speed of approval and money is provided. Small businesses especially commonly face problems when applying for funding, but technology is making it easier for them to acquire the funding they need to grow.