By Mark Rockefeller, Co-founder, Street Shares
This may sound familiar: You're experiencing the everyday challenges of owning and operating a small business. Your business is doing well but you could use some extra working capital to purchase inventory, hire an employee, or run an ad campaign to boost sales this month. You've decided to look for a business loan, but you may not know where to start. The good news? You're not alone. The better news? Between traditional banks and online lenders, there are more options available to you today than ever before.
You could take the conventional route and apply through a local bank, but that process may take a long time and prove difficult to gain approval. Another approach would be to apply through an online business lender, which may eliminate some of those frustrations. Over the past few years, online, or alternative, lenders have picked up steam and become a viable option for small businesses seeking funding.
As a business owner, what should you know about online lenders?
Better technology means faster funding. Online lenders capture all required data and documents online. Through better technology, these lenders can review your application and provide a decision in a number of minutes. From beginning to end, you can have your funds in a matter of days, not weeks or months.
More data means greater likelihood of being approved. With better technology comes the ability to review a greater amount of data during the underwriting process. Unlike banks, online lenders can quickly and easily tap into less-traditional sources of information, such as social media, ratings and reviews, or daily transactions. To a lender, more data equals greater confidence in a borrower. And greater confidence means a better chance of being approved for a loan.
Lower operating costs means small businesses get funded. Traditional banks have thousands of employees and hundreds of branches, all of which increase operational costs. In order to pay for their physical locations, banks focus on big loans and big businesses. Online lenders drastically reduce the costs of operation and can afford to serve businesses that go ignored by the banks. Traditional banks usually won't fund a business that's only a year old or that has less than $1 million in annual revenue, but online lenders have made it their mission to provide these businesses with the funding they need.
During this busy time of year, many businesses need some extra working capital and an online lender may be the right choice. At StreetShares, we're committed to working with you and providing a fast and pleasant funding experience. If you're in the market, check out our small business loans.