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Your Guide to Online Small Business Lenders

When you start a small business, you also sign up for years of raising capital – and occasionally, that includes taking out a loan or two. That’s the bad news.

The good news is, you have several options at your disposal, including a growing network of online small business lenders that include a mix of traditional banks, as well as newer upstarts trying to disrupt the space. Not only has this resulted in a competitive lending environment than ensures you’ll be able to find the best loans these companies can offer, but also a competitive business environment that has fostered better customer service and easy-to-use digital platforms.

The following is a quick introduction to the world of small business online lending and some guidance on what to look out for.

What Are Your Options?

Before you look at lenders, you need to decide what type of financing you’re looking for. Because yes, while online small business lenders can provide you with traditional loans, they also offer so much more. Here are a few types of loans you might want to consider:

  • Term Loans: The gold standard. A lender provides you with a lump sum of cash that you repay over time with interest.
  • SBA Loans: These are loans that are guaranteed by the U.S. Small Business Administration. You can learn more about SBA loans here, but in short, the SBA’s guarantee allows for-profit small businesses to get better rates on loans than they otherwise might have secured for themselves.
  • Business Lines of Credit: A line of credit essentially gives you the ability to borrow, as you need it, and you only pay interest on anything you’ve actually borrowed. (So, for instance, you might get a $50,000 line of credit, none of which you access now, and then later decide to borrow just $2,000.) This makes sense for companies that don’t have any immediate needs but wants financial flexibility.
  • Invoice Financing: If you’re particularly strapped for cash, invoice financing allows you to borrow against any unpaid invoices you have. This tends to be an expensive means of financing, and typically only works for companies whose customers are other businesses.
  • Equipment Financing: If you need a large piece of equipment for your business needs – say, machinery or a truck – certain lenders will allow you to finance the deal across the asset’s expected lifecycle. Because hard assets like these have a very tangible value, terms for these loans tend to revolve more around the equipment itself rather than your credit score.

Online Small Business Lenders

Once you’ve determined what kind of loan you’re looking for, you can start hunting down the right lender for you. This is a short list of some of the major small business partners you’ll find out there:

  • BlueVineBlueVine is an online lender that provides term loans, lines of credit and invoice factoring. Its invoice factoring business works like this: Once you’re approved, you submit invoices and are advanced 85% to 90% of the invoice. They send the remaining cash, minus fees, to you once the invoice is paid.
  • Chase for BusinessJPMorgan Chase – America’s largest bank by assets – is a large small business loan provider via its Chase for Business arm. Its offerings include business loans, SBA loans, lines of credit and commercial real estate lending.
  • FundationFundation is an online lender that works with regional and community banks, as well as B2B lenders, to provide loans to small- and medium-size businesses. It provides term loans (typically up to four years) and lines of credit with features such as no prepayment fees and low upfront fees.
  • Huntington BankColumbus, Ohio-based Huntington Bank, a regional financial company, is another leading SBA loan provider. In addition to numerous business products such as checking accounts, business credit cards and merchant services, it also can do term, real estate and SBA loans, as well as lines of credit. It also has lending services tailored specifically for dental and veterinarian practices.
  • LendingClubMany people know LendingClub for its breakthrough peer-to-peer personal lending business, but it also provides small business term loans and lines of credit. Companies that have been in business 12 months or more, and have at least $50,000 in sales, among other qualifications, are eligible to borrow at terms ranging from one to five years.
  • OnDeck CapitalOnDeck is another online lender that provides fixed-term loans and lines of credit, though its terms tend to be shorter-term in nature – between three and 24 months. Customers must have at least $100,000 in annual revenues and been in business for at least a year.

This is just a handful of the options available to you – numerous other traditional banks, as well as internet-based specialists, are in the online small business lending game. But if you’re considering a small business loan, we suggest you start by consulting with the pros. McManamon & Co. offers accounting and consulting services to small and midsize businesses. We’re equipped to analyze your current financial situation, determine the capital you need and help you find a lender that’s right for you.

Call 440.892.9088 or contact us online to determine whether (and what kind of) financing is right for you.

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