Easy Online Business Loans: Quick Funding Options for Urgent Needs

Key Takeaways:

• What are easy online business loans and how do they work

• Difference between online business loans and traditional bank loans

• Types of easy business loan online and eligibility criteria

• Benefits and common trade-offs of online business loans

Cash flow challenges can hit businesses of any size unexpectedly. From a startup's first year to a long-standing business suffering from a seasonal downturn in monthly revenue, every business owner faces these financial hurdles. Sometimes, it might be due to a sudden spike in expenses, such as urgent repairs for equipment, to sudden bills from an unexpected supplier, that leads to a heightened level of anxiety for a business owner trying to run their operations.

Traditional loans for small businesses through banks and credit unions can sometimes take weeks or months for the loan to be processed and funded. One of the popular solutions to this common business problem is quick and easy online business loans. However, the term “easy” does not mean that the approval is guaranteed. It is termed easy because application process is generally more streamlined and digital compared to traditional bank lending.

This article explores how quick and easy business loan options operate, when they are valuable, and how they differ from other small business loans such as SBA, business lines of credit, and more. It is important to note that “easy” refers to access and process, not to the absence of underwriting, credit evaluation, or legal requirements.

What Are Easy Online Business Loans?

Easy online business loans are business lending products offered by online lenders that allow borrowers to apply digitally and move through a more streamlined application process, compared to traditional banks. Approval is still subject to underwriting, eligibility requirements, and credit evaluation.

These loans are not “easy” in the sense of guaranteed approval but rather designed to reduce friction in how borrowers submit information and receive decisions.

These small business loans have an online process where entrepreneurs submit an online application and upload supporting documents. Many lenders use automated systems to assess creditworthiness, cash flow, and eligibility of the borrowers. This is why they generally make quicker funding decisions than most other small business financing options.

Following are some of the key factors that differentiate easy online business loans from many traditional funding options:

• The application process is entirely digital which makes it quicker.

• Lenders generally use automated data checks (bank statements, revenue records) instead of piles of paperwork.

• Since, the application process is quick and there are digital tools used in the underwriting process, the approval timeline is small and funding decisions are made quickly.

Many small business owners refer to these options as “quick and easy business loans”, meaning faster application reviews and quicker funding timelines but not simplified credit standards.

Why Traditional Bank Loans May Not Fit Urgent Needs?

Most business owners first think of a traditional bank or credit union or nonprofit unions when pursuing small business loans. After all, banks typically offer lower interest rates, long loan terms, and are often considered a safer option.

However, banks can take considerable time to make the funding decision. This is why they may not fit situations when you're facing an urgent cash demand. The slower process is due to the following reasons:

• Traditional bank loan applications often require extensive documentation like financial statements, tax returns, business plans, and sometimes real estate collateral.

• Bank underwriting teams manually review these materials, which can take weeks.

• Even if you get approved, funding might not arrive for another several weeks.

In contrast, many easy online business loans expedite this process through convenient online application and digital tools, which is why online lenders have become a go-to for urgent needs.

How Do Easy Online Business Loans Work?

The application process for easy online business loans may slightly vary for different lenders because of their internal processes. However, there's a general basic process that most of them follow.

Following is a list of the key steps in the application process:

1. Establish a Capital Requirement for Your Business

You need to figure out how much money you need and what you plan to use it for. Is it going to go towards covering short-term business expenses? Is it there to fill gaps in your cash flow? Is it intended to help you expand your business operations? This step will also give you an idea of how much you can afford to pay back.

2. Collect All the Required Documents Before Starting Your Application

Some of the most commonly asked for documents include:

• Business credit and personal credit information.

• Documentation of annual revenue of businesses or current bank statements.

• Statements for business accounts/checking accounts.

• Proof of Business Ownership (i.e. Tax Identification Number or Employer Identification Number (EIN).

While online lenders generally have fewer requirements than traditional banks, they will still use the above materials to evaluate your application.

3. Complete The Online Application Form

The time it takes to complete the online applications can be anywhere from 10-20 minutes. Some lenders provide integration options for users' accounting software and/or banks, making it possible to validate documents more quickly.

4. Underwriting/Verification

Lenders' underwriting processes usually automatically review applications and determine creditworthiness based on decentralized data and financial metrics such as FICO or alternative Credit Reporting Solutions and income and cash flow data.

5. Receive Your Funds

If approved, lenders generally deposit money directly to your business checking account. At every step of the process, speed is paired with flexibility. However, there may be a few trade-offs, covered later in this article.

Common Types of Easy Online Business Loans

There are several types of easy online business loans that can be a good fit for companies looking for a convenient way to obtain financing.

Short-Term Loans

Short-term loans are lump-sum loans designed for urgent needs. They typically come with repayment terms of less than two years and set monthly payments. These are often used for immediate operating expenses or bridging cash flow gaps.

Business Line of Credit

A business line of credit acts like a credit card for your business. You get approved for a credit limit and borrow only what you need. Interest accrues only on the portion you use. It's helpful for fluctuating needs like covering seasonal payroll or inventory costs.

Equipment Financing

Equipment financing is specifically used when businesses need new tools, machinery, vehicle, software, or any other equipment essential for the business. In this type of loan, the equipment itself serves as the collateral most of the time. This small business funding solution is helpful for businesses that cannot pay huge upfront costs for expensive business equipment. Both banks and online lenders offer equipment financing, however, the funding decision by the online lender may be quicker.

Each type serves different business needs, and the choice depends on whether you need working capital loans, coverage for equipment loans, refinancing, or another specialty option.

Benefits of Easy Online Business Loans for Small Business Owners

Easy online business loans offer several advantages for small business owners especially as time is of the essence for them. Some of the major advantages of easy online business loans:

• Speed: Easy online business loans are designed to offer greater convenience and quicker decision timelines, while still following standard underwriting and lending practices. Lenders continue to evaluate cash flow, creditworthiness, and business performance before approving funding.

• Convenience: The online application process is entirely digital, often without visiting a physical branch.

• Flexible Eligibility: Some lenders may accept lower credit scores or bad credit and evaluate monthly revenue and cash flow instead.

• Less Paperwork: Compared to traditional loans, documentation is more streamlined.

Important Trade-offs of Easy Online Business Loans to Watch Out for

Every financing solution has some trade-offs. While easy online business loans are quick and convenient, they may come with the following disadvantages:

• Higher Interest Rates: Faster lending can often mean higher cost. Some short-term options or merchant cash advances can have effective annual interest rates that exceed traditional bank loans.

• Shorter Repayment Terms: Many quick funding products require repayment in months rather than years. This can be negatively impact the cashflow of the business.

• Daily or Weekly Payments: Depending on your specific loan situation, you may be required to make daily/weekly payments on your loan, rather than the once monthly payment typical of most traditional bank loans.

• Smaller Loan Amounts: Fast options generally cap at lower amounts than Small Business Administration (SBA) or bank term loans.

Before applying for any online loan product, always review the terms of the account and understand the total amount that will need to be repaid. Carefully understand the breakup of any additional fees associated with the loan as they can significantly add up the loan amount.

Eligibility Criteria for Easy Online Business Loans

While easy online business loans emphasize a simplified application experience, eligibility requirements still apply and vary by lender. However, most of them follow the standard requirements. Some of these are as follows:

• Credit Score: Some lenders may accept personal credit scores as low as 500+, but better scores still improve options.

• Time in Business: Many lenders require borrowers to have at least six months of business operation.

• Monthly Revenue: Business lenders often look at consistent monthly revenue to determine creditworthiness.

• Business Bank Account: Borrower must have an active checking account for deposits and repayments.

Startups without revenue yet may find it harder to qualify for some of the quick online solutions. However, there are certain microloans or SBA loan programs that help fledgling enterprises too.

Conclusion

Easy online business loans can be a helpful financing option for businesses that value a more efficient application process and quicker access to funding, provided they meet the lender's underwriting criteria. They're not a replacement for long-term planning or well-structured investment, but they can provide a business line of credit, working capital, or lump-sum funds when traditional loans are too slow.

When making any financial decision, borrowers should first check the eligibility requirements and interest rates and choose the right type of loan that suits their business needs. Quick access to funding can allow a business to continue moving forward; however, this should be done with prudence and care.