Show Me The E-Money – Finding Business Loans Online
by Leeia Ladipoh on March 5th, 2008
If you are trying to find a little extra capital to continue to grow your small business, it may not be as easy of a task as you had hoped. Because of the housing market crunch, a lot of the money that banks would usually use to finance loans is stuck in the rising number of foreclosures. This means many banking lenders are not as willing to write loans, until they can reclaim some of the cash they are missing.
What is your small company to do when you feel a growth spurt coming on and are having a tough time getting financing from your banking institution?
Look online.
Beginning Your Online Search
There are a number of companies that may not have brick-and-mortar buildings, but do have money to lend that you can get a piece of.
When you begin your online search, remember for as many honest lenders that are on the Internet, there are just as many fraudulent lenders who are just trying to get your personal information and steal your identity. Never give your personal information out until you have done some research on the company that you are considering.
You need to look for an online loan company with a positive reputation. Once you have found a lender you are interested in, do a Google search for that lender’s name. Also, check with the Federal Trade Commission . They keep track of companies that have complaints levied against them.
You should be able to log on to the FTC site and search for the company you are considering using to see if any complaints come up. If so, you may want to look for another lender.
Well-Known E-Funding Sources
Try contacting larger, better-known online lenders such as ELoan or Lending Tree . These companies have been around for a while and have completed a number of successful transactions.
They offer loans in all categories, from home loans to personal and commercial loans, so there is little doubt you will be able to find a loan that suits your needs.
Non-Traditional Online Sources
You may also want to investigate less traditional loan avenues including companies like Globe Funder and Prosper.com . Globe Funder takes your loan needs and shops them around to various lenders worldwide to try to find a match. Prosper.com allows person-to-person loans. They match up borrowers and private lenders, who want to help people.
The interest rates for these types of loans are comparable to bank loans and are often much lower than credit card financing rates would be. It is important to note that with companies like Prosper.com, you will not be able to secure large loans, as they rarely do loans over $25,000.
Loans, Rates and Fees
You will have to choose between secured and unsecured loans. Secured loans are loans where you use collateral to back up the loan. With unsecured loans, you get the money without putting anything on the line. If you need a longer loan period, you may want to find the collateral for a secured loan, as they have longer grace periods for repayment.
Read interest rate information carefully. There are many companies that offer loans, but that hide their high interest rates. Many payday loan operations offer personal and business loans. If you do not do your research, you could end up paying 600% or more in annual interest.
Also, watch for any loan “fees”. While small processing fees are common, some scam artists out there will take advantage of your situation and charge you astronomical fees to apply for a loan. In many cases, these are not even legitimate businesses and they will disappear with your “application fee”.
The online world has opened many doors to new opportunities for small businesses. Finding business loans is one of these. The key to getting the right online business loan for your company is to make sure you choose carefully and do your research before you sign anything.