You have an online business, and it’s growing at a steady, maybe even a surprisingly fast pace. Yes, it can be very exciting and also a little scary. With more sales comes the need for more inventory, equipment, and help. This takes money! If you are facing the growing pains that often go hand-in-hand with an increasingly successful business, it might be time to start considering online business loans to help fuel your growth.
Of course, not all business loans are created equal. It pays to shop around to find the right loan for your particular needs. The choice you make can have a big effect on your finances. With that said, let’s take a closer look at a few possibilities worth considering for online business loans.
Large, Regional Banks
Many entrepreneurs start the process of researching online business loans by looking at rates offered by large, regional, or national banks. These lenders are often the most difficult for small, online businesses because their approval processes are usually more lengthy and stringent. Before you start the application process for an online business loan with any bank, you will definitely want to have a good understanding of their procedures, the maximum and minimum amounts you can borrow, covenants, and collateral.
You can safely assume that a large bank will be basing your credit worthiness on your credit history, how much money you need, your business pan, and other types of documentation.
Like larger banks, community lenders will also want documentation before doling out any online business loans. However, because they have a vested interest in the local area, community banks may be more willing to lend funds even if you don’t yet have large reserves of cash or collateral.
With any type of bank financing, you can expect that the loan application process will take some time – often several weeks or longer. So, if you need cash quickly for taking advantage of a special offer from a vendor or to hire help when you’re in a time crunch, it may not be your best option.
Kabbage Business Loan
This leads us into another option that’s different from traditional sources of online business loans. Kabbage offers a unique type of funding that is both fast and flexible. It’s a good option when you need funds quickly for buying inventory or launching a promotion. Kabbage takes less than seven minutes to apply for a line of credit and receive funds. By signing up, you’re not obligated to take the money, so this provides a level of flexibility that you don’t have with small business loans from bank lenders.
As an online business owner, you may be tempted to use personal credit cards for funding. While many business owners have gone this route, it’s not always such as good idea. It’s important to keep in mind that your personal credit is at stake. So, if your business fails, you’ll still be on the hook for what you’ve borrowed on credit cards for your business. And, if you can’t pay the balance, your credit could be in serious jeopardy.
It may be worth your while to get a business credit card. It can be used for purchasing necessities such as office supplies, and it can also help you establish a credit history for your business. Make sure to compare interest rates and loyalty programs to determine which one offers the best option for you.
Online business loans and other sources of funding can definitely help you reach new heights of success as your business grows. But, you will want to thoroughly understand the terms of any loan or advance that you receive before you borrow. With cash in hand to buy what you need to grow along with a smart strategy for borrowing, you’ll be well-positioned for getting to the next level with your online business.