Online business loans FAQs
posted by: Jason Hulott
Business loans are a common form of finance for the UK’s huge army of small and medium sized enterprises, says the British Business Bank, and one of the first ports of call for companies looking to grow or expand their business or for other reasons raise necessary working capital.
Increasingly – in an age when more and more commercial transactions are taking place via the internet – much of this new borrowing takes the form of online business loans.
So, what are online business loans and how do they work? The following are some of the most frequently asked questions.
Why are they called online business loans?
The description is entirely appropriate, since every stage of the process, from initial enquiry, through formal application, to the electronic transfer of requested funds, and the ongoing management during repayment of the loan may be conducted completely online.
At any stage during your application or throughout the terms of online business loans, however, lenders also typically maintain a telephone contact number.
How much can I borrow
Different lenders have different limits for the amount of finance that may be raised through online business loans.
Here at Cubefunder we offer online business loans in a range of between £5,000 and £100,000.
What are the repayment terms?
Once again, the repayment terms may vary from one lender to another, but a typical period is from 3 months to up to 12 months.
In other words, online business loans are usually short-term loans, thus avoiding the significant interest charges that accumulate once any borrowing stretches into years.
What is the cost of an online business loan?
The cost of any borrowing is determined, of course, by the amount of the loan and the period over which you intend to repay it – the larger the sum borrowed and the longer before it is repaid, the higher the cost of your borrowing.
Lenders of online business loans typically make clear from the very outset the total cost of your borrowing, which is also reflected in the equal monthly repayment instalments to which you agree.
Are online business loans secured or unsecured?
Whereas your bank and other lenders may ask for collateral against the amount you borrow – thus putting at risk the company or personal assets you offer as security – online business loans are typically unsecured.
Lenders who are themselves entrepreneurs are able to take the risk on an unsecured loan and still offer attractive and competitive rates of interest because of their understanding of the nature of your business and the market in which you are operating.
How quickly can online business loans be raised?
One of the great advantages of an entirely online, streamlined application process is the speed with which online business loans may be delivered to your company bank account.
Although there are naturally differences in the speed with which lenders respond, some of them are able to give a decision in principle just a minute or two after your initial enquiry.
This must be followed by a formal application – allowing the lender to assess the financial status of your company and its ability to repay the loan – and if everything meets with approval, many lenders aim to deliver the requested funds electronically, directly to your company bank account within the next day or so.