Small or starting businesses can have different challenges than most big ones when it comes to borrowing money to grow. This is no secret for any entrepreneur that has tried to fund his or her project. But innovation in financial technologies has changed the face of small business loans for good.
Now, entrepreneurs have a wide specialized offer of financial products thanks to online companies like caminofinancial.com that offer small business loans. And there are many advantages that you can harness to help you fulfill or grow your operation with a few simple clicks and a faster response time.
So, if you are considering small business loans to fund your project, this are 5 things that banks don’t want you to know about the brand-new competition:
1. Faster approval
There is no doubt that any transaction in the bank will take time and effort, sometimes more than you have or are willing to give. Especially in a decade where you can have food delivered to your house with a simple app or you can learn everything you need to know about a subject without having to consult 10 books in a library. In 2023, you can do most things on your phone and you are not willing to wait for the answer you are looking for. So, why should small business loans be any different. Sure, you might not have the money in your pocket in 30 minutes or less but the responses of online financial institutions are way faster than in a big bank that have regulators breathing down their backs.
2. Fit for smaller needs
With the infrastructure a traditional bank requires, they have to be selective with the accounts they want with them. After all, it’s less profitable for a bank to have 10 small clients in debt than a really big one. But a swift small company can’t over borrow and doesn’t have the same cash flow needs as a big enterprise. If you are looking to borrow some money to take your small operation to a medium size, online choices might be better. Less money and faster results.
3. Open for new business
Setting aside that most banks will ask you for collateral that your small business most likely don’t have, most banks need to see a proven business plan that has a few years operating. This becomes the egg or the chicken paradox because you can’t operate without borrowing and you can borrow without operating. Online financial institutions are more open to taking the risk with projects or small businesses that are barely taking off to help them grow.
4. Celebrate innovators and out of the box business
A bank executive might frown upon a tech business that wants to revolution and disrupt the way we buy fabric or a pet spa with holistic therapy. Their bets are more into seasoned offers like the automobile industry or mass production of consumer goods, meanwhile online financial institutions are willing to bet on your innovation. For them, the goal is to promote the creation of small business and new jobs. Even if the job is really really new to the world.
5. Less paperwork
It’s not like you are going to get an approval just because you ask for it, but online small business loans require less paperwork because they have a leaner and faster machinery. Your credit score and business plan might be enough, but they are not expecting a three-ring circus with credit reports, financial projections, tax returns for the last 10 years and your college transcripts. Lean, fast, easy.
6. Competitive rates
Business loans are not more expensive than traditional bank loans, the reason is simple, they compete among themselves to get your business so, the best way is to keep it under the FED interest rates for this kind of financial products. But, beware! If you find one offer that has a super low rate, you should do extra research because if it seems too good to be true, it probably is. Make sure that you take your business to a serious institution and read the fine print to find hidden clauses that could cost you more than you initially planned.
7. Tailored for your needs
The best thing about this business loans is that you can actually borrow for specific needs of your company because there are different products for different necessities. Once you have a business plan, you’ll know exactly what you need the money for and you can shop about with that idea in mind, either an equipment loan or a working capital loan, it’s up to you and, since you already know everything you’ll use the money for, it will be easier to find the right business loan to fulfill your specific needs and with specific terms.
8. Cheaper that a credit card
Believe it or not, some people still use credit cards to fund their business and the awful truth is that, even though money is money, these funds come with a price. And credit cards are way too expensive and with less structure for business needs. If you need an open line of credit for your company, there are specialized products for that, but don’t use a higher rate plastic to cover your needs. When the time is right and your project is big enough, shop for a business credit card that can help you for representation expenses, traveling and other things that these financial options are for. In the meanwhile, put your credit card back on the wallet and look for an actual business loan for whatever your company needs to start or grow.
This is why a company that is just starting might want to take a hard look at online options to fund its operation and the main reason why this market share is growing fast. But before signing any papers (online or otherwise), research and comparison are key to make the best choice of small business loans.