When it comes to business financing, there are so many funding options a venture can choose from to achieve its funding objectives for necessary capital infusion. These loans and advances are available at varying terms of lending to make financing accessible at affordable cost across business locations and scales.
While the funding options are accessible through an in-person visit to your nearest lender, an online business loan brings a bunch of benefits lacking otherwise. Advantages like increased accessibility, quick verification and approval, etc. make these loan options more preferable than their offline counterparts. Below given are all the necessary details you would need to secure online business funding for your venture.
Types of Business Loans Available Online
Following are some of the prominent online business loan categories you can apply under for your different business financing needs.
- SME loans: These are online loans and advances available online with special categorisation under SME and MSME funding. Thus, among other eligibility requirements, businesses categorised as small and medium enterprises only can avail funding under the loan option. These are usually unsecured advances available against simple eligibility requirements only.
- Machinery loan: These are usually long-term funding options dedicated to provide necessary business finance for machinery purchase. They are usually high-value advances with objective of enabling an easy new machinery purchase or upgrade for a business.
- Working capital loan: A working capital loan is usually a short-term advance with financing targeted to fulfil operating funding needs of a business on a day-to-day basis.
- Secured term loan: These are collateral-based advances that allow you to leverage your business assets to raise necessary funding. They are usually long-term loans and available in a high quantum.
- Invoice discounting: The financing option essentially allows you to leverage your business’s unpaid invoices for raising operating funding much before the receipt due date. It helps reduce the payment cycle and improves immediate cash flow of a business.
- Project and acquisition finance: Businesses needing funds to expand their ventures through acquisitions or new office establishment can resort to project and acquisition finance. The financing proposition only pacifies funding as new business acquisitions also bring along added profits. And improved chances of timely loan repayment with reduced risk.
- Medical equipment loan: Healthcare professionals involved in running a medical facility such as a clinic, a hospital or a pathological centre can also secured dedicated funding through a medical equipment loan available online. The loan option not only eases costly equipment purchase. But also provides for its installation and operating costs on a daily basis.
Eligibility and Document Requirements for an Online Business Loan
The eligibility and document requirements for different online business loans can vary with the loan option as well as from one financial institution to another. However, there are some standard requirements that a borrower needs to fulfil to avail online business funding. They include the following.
- Eligibility requirements
- Applicant must be a self-employed individual or a public/private proprietor to apply.
- The current business must be running for a minimum duration of 3 years.
- Profitability of the business must also match the standard norms in its industry.
- The individual as well as business must also hold a desirable credit score.
Lenders usually expect a credit score between 700 and 750. Or above on a scale of 300 to 900 for hassle-free approval of the loan amount applied for. As creditworthiness is a critical indicator of one’s creditworthiness over a long duration. It is ideal that you take necessary steps towards credit score improvement way before applying for the advance to help improve the score over time. A higher credit score shall also give you leverage in lender negotiation for favourable terms of the loan as it represents a minimised risk of lending.
Further, you must also provide the necessary documents to complete your online business loan application. Some standard document requirements are as follows.
- Documents needed
- Complete profiles of all business directors and partners.
- Identity and address proofs of all directors and partners of the company.
- Documents related to company incorporation, registration, partnership agreement, etc.
- Audited financial statements of 3 immediately preceding years.
- Financial projections for the next one to two years.
The list of documents is only indicative and the lender may ask for additional documents. If needed to confirm and verify applicant eligibility. It is best to keep all your documents prepared before applying for a business loan online to ensure hassle-free and streamlined loan processing.
Top 3 Reasons to Avail a Business Loan Online
Among all the reasons that you must go for an online business loan, the following take precedence.
- Quick financing
The online business financing is a typically quicker process that its offline counterpart. Eligible candidates applying for a business loan online can expect to receive approval for the advance within only up to 15 minutes with the best lenders. It follows quick disbursal as well, whereby if all requirements are in place and the lender is satisfied of your eligibility, you can expect to receive the loan amount in your account in up to the next 48 hours.
In the case of secured business loans, the approval and disbursal duration can extend by up to a few days due to the intricacy of verification involved related to the business, owner as well as the asset mortgaged.
- Minimal documentation
As online financing helps bypass several lengthy requirements, it also reduces paperwork requirements for borrowers. An applicant would thus need to provide only a handful of identity, address and income documents to prove loan eligibility. Reduced paperwork also hastens loan processing, thus aiding with quick financing.
- Funding at your doorstep
Some of the best lenders in the market, especially NBFCs, have also further simplified the process of availing an online business loan with doorstep financing facility. A representative would thus arrive at your doorstep to collect documents. And verify other details after you have completed the online application process. You thus do not need to step out of your home for the least of requirements when securing a business loan online.
Such features make it easier to go for an online funding option especially when you are encountering an emergency financing need for your business. Businesses may come across emergency financing needs like machinery. And equipment update, seasonal capacity expansion, working capital financing, introduction of new cash, etc., which can be conveniently fulfilled with the easy availability of a business loan online.
How to Apply for a Business Loan Online?
Complete the following steps to apply for an online business loan.
- Select a suitable lender and choose the type of loan you seek to avail.
- Visit the lender’s official website and navigate to the concerned loan application form.
- Fill in the online application form with necessary persona, business, and financial details and submit.
- Upon submitting the application form, a representative of the lender will connect with you for further processing of the loan.
- Once all the verifications and assessments are complete, the loan amount will be approved and disbursed.
Availing an online business loan, however, requires financial preparation, whereby you must have sufficient flow of monthly funds to make EMI payments without straining your finances. To free up your funds and represent a high repayment capacity. You can plan ahead by paying off any running loan or advance for improved chances of quick approval.
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