When you can’t wait to go through the lengthy and often complicated process of getting a business loan from the bank, borrowing from an online lender may be a viable alternative.
There are many legitimate online lending institutions, but there are also a lot of scams. Use these rules to guide you as you look for a reputable online source for business funding.
Any lender that asks for fees in advance is probably running a scam. Under the guise of processing, application or service fees, these lenders can make off with a large chunk of your money while giving nothing in return.
Be particularly wary of lenders who ask for wire transfers. These are difficult to trace and almost guarantee that you won’t be able to get your money back if the deal falls through.
It’s easy for shady online lenders to hide behind the anonymity of the Internet. Make sure that the company you’re considering has a real street address and phone number.
Asking for references and seeing client testimonial videos can also help validate the reputation of an online lending company.
Even though online lenders are more likely than banks to lend to businesses with less-than-perfect credit, they should still want to see financial information before making a final decision.
The process used by trustworthy lenders should be less rigorous than the one used by banks, taking some of the hassle out of applying for a loan. However, if a lender “guarantees” you money without looking at credit scores or promises they can get you a loan no matter what, it’s time to look elsewhere.
Security at the website and server level is essential along with data encryption to protect your information during transfer. Lenders must operate in compliance with local and federal laws while taking every precaution possible to prevent data compromise.
After narrowing your choices of lenders down, take a closer look at interest rates, fees and terms for the loans they offer. Read all the fine print regarding payments and potential penalties, and see how the APR affects how much you’ll wind up paying overall. The loan that seems the least expensive may not be as attractive once you’ve done all the math.
If you’re still unsure about which online lender to choose, there’s nothing wrong with asking family, friends and fellow business owners for advice.
Hearing other small business owner’s experiences lets you know what to expect from a lender and speeds the decision-making process so that you can get the money your business needs.
ARF Financial is a finance lender licensed by the California Department of Business Oversight (license #603 7958). We’ve helped over 6,000 businesses obtain approvals on more than 12,000 loans with proceeds in excess of $600,000,000.
Contact us today to speak with one of our business loan consultants.