Small businesses have more choices and options for loans and financing than ever. And the good news is you have access to a wide range of resources at your fingertips, without leaving your office -- all through the Internet.
Online lending marketplaces and alternative funding sources make getting financing so much easier today than a decade ago.
In this article, I cover some of the common financing and loan options existing today and where to find them online. You can do much of your research online, and even apply directly online for a loan or funds in many instances.
As you research options, keep in mind the terminology is evolving. Often the definitions of financing type vary from source to source. Some financing sources today simply call everything “small business loans” even if the financing really takes the form of a cash advance or line of credit or something else. Here are some options:
SBA Loans are loans that are backed by guarantees from the U.S. Small Business Administration. They are issued through private lenders authorized to make SBA loans.
An efficient way to get started with SBA loans is at the SBA.gov website. While you can’t apply directly online for an SBA loan, you can do a lot of the research and preliminary steps online:
- Research the different types of SBA loans.
- Learn the information you need to gather.
- Find SBA lenders. The SBA Linc website helps connect small businesses with SBA lenders.
Lines of Credit and Traditional Loans
If you need money for day-to-day cash flow, a line of credit could be the solution. Small business lines of credit are an excellent choice because you draw on them only as needed, and you only pay interest on the portion you use.
A loan, on the other hand, delivers the funds in a lump sum and you repay the loan with interest, usually in monthly payments.
Today an extremely efficient option is to visit an online financing marketplace, such as Biz2Credit.com, Lendio.com or Fundera.com. Such financing marketplaces match up businesses to lenders. You can apply directly online at such marketplaces, saving time and getting access to multiple funding sources in one place.
Microloans are loans for small businesses, in small amounts. If you’re concerned that your business is too small or too young to interest a bank, a microloan may be for you.
Accion.org provides microloans, starting at $500 on up. First time borrowers can apply directly online at the Accion website.
The SBA also has a microloan program, in amounts up to $50, 000, with the average amount being $13, 000. Start your research for SBA microloans here.
Business Credit Cards and Charge Cards
If you need credit for smaller or routine purchases, such as for travel expenses or online software licenses, then a business credit card is useful. Charge cards are similar to credit cards, except that you have to pay off the balance monthly.
Don’t rely on personal credit cards. Rather, apply for a business card so that you establish credit in your business name and so as not to max out personal credit cards.
You can go to the website of a card provider such as American Express or Discover, or to a bank such as Chase or Capital One, and apply directly online.
Cash Advances and/or Merchant Advances
Cash advances are a form of financing made against your future receivables or credit card receipts. Like any type of financing there are pros and cons. Cash advances may not require a credit check, minimize paperwork, and often the money is available quickly (in minutes or hours). However, the fees and interest can be expensive.
Kabbage.com is a unique funding source for alternative financing because the Kabbage platform connects to a number of services used for commerce transactions, such as QuickBooks, Etsy, Amazon or Stripe. Kabbage quickly verifies the business’s information through direct connection with the transaction service.
Square and PayPal also offer cash advances. If you have a history of using these services, cash advances may be available by applying right in your online account. Some credit cards also offer advances.
The above should give you an idea of the range of small business loans and financing options you can start checking out online today.