Should You Trust Online Small Business Lenders?
How many times have you thought about searching for small business lenders and applying for a business loan online? If you’re like most people, then it must be countless times.
The online lending industry has grown massively in the last few years, and it has changed the way businesses seek funding. Of course, as a business owner, you need to be cautious about where you take out a business loan and the small business lenders you deal with.
It may seem easier and faster compared to other financial institutions such as banks, but you need to be armed with the right knowledge to navigate this territory wisely.
Reasons to Be Wary of Online Small Business Lenders
The internet has made so many things so much easier and convenient that you can order pizza, pay your bills, and even get a loan. Still, the stakes are so much higher when taking out a loan on the internet, especially a business loan, since it’s bound to be a significant amount. Here are some reasons why you would want to be wary of them.
Some of Them are Predators
Losing money is a considerable risk. It’s true that there are fake business lenders online, and they are charming with their promises. They charge unsuspecting business owners fees upfront and ultimately end up scamming them. Even if you do get the loan, they could charge you very high-interest rates and fees.
Predatory lending has been an ongoing issue for a long time, and you risk losing a lot if you’re not careful. Still, not all online lenders are unscrupulous. The thing is, there are many legitimate online business lenders in the U.S. You need to do your due diligence to ensure that you’re dealing with trustworthy people.
Your Data Could Be At Risk
Professional online business lenders are stringent with customer data, something that cannot be said about scammers. Personal information is very sensitive, and you need to be careful about the terms and conditions you agree to.
Business lenders need this information to gauge what you qualify for, but scammers will sell it to the highest bidder. You must research the intent of the creditor before submitting any forms.
The Realities of Online Small Business Lenders You Should Know
Online business lenders operate quite differently from other financial institutions and for good reasons. Let’s look at some of the things you should be aware of before applying for a small business loan from online lenders.
Expect High-Interest Rates
Financial institutions, such as banks, provide small business loans with some of the best interest rates. The only problem with banks is that they have a lengthy application process, and most business owners don’t want to wait that long.
Online business lenders are quicker with the process, but the interest rates are always much higher. If you do apply for an online loan, then you should keep a close eye on the interest rates.
Online Small Business Lenders and Phone Communications
There is a high possibility that you and the lender will have zero FaceTime, and your communication will be internet and phone-based. You need to ensure that you are communicating with a real person and not just a chatbot on their website.
The company representatives should be friendly and ready to answer all your questions without hesitation. If they dodge questions or are always unavailable, then it’s a red flag, and you should stay away from them.
How do You Find Legitimate Online Small Business Lenders?
There are a few ways to verify whether an online lending company is legitimate. These include checking them out at the Better Business Bureau as well as looking up their online customer reviews, among other things. We’re going to share some of these things with you.
Check With the Attorney General
All online lenders are required by each state to register their companies with the attorney general before conducting business. If you want to be absolutely sure that you’re dealing with a legit company, you can check if they are registered in your state.
If They Ask for Money Upfront
Online scammers will ask for some kind of fee upfront before approving the loan. As soon as you pay up, they cut all contact and disappear with the money. However, legitimate companies won’t do this, so if it happens to you, run in the other direction.
They Don’t Guarantee Approval
This is another habit you get with online scammers. Legitimate online lenders will never guarantee your loan because, in the end, they are still risking their money on you, especially if you have a poor credit score.
Research Their Online Presence
When looking for online small business lenders, ask yourself if you’ve ever heard of the companies you come across. Search for them on the internet to see any information you can find about them. A legitimate company will have a website even if they’re relatively new in the industry.
Check With the BBB
An online presence does not guarantee the legitimacy of a business because even scammers can put up fake company reviews. The Better Business Bureau will have information about the business, customer reviews, and even a grade.
Look Out for Complaints
Once you find an online business lender you’d like to deal with, type their business name and the word “complaints” to see what you find. Any company is bound to have a few complaints every now and then. The problem arises when the complaints outnumber the positive reviews, in which case you should stay away.
Comparing Small Business Lenders Just Got Easier
Now that you are well aware of what scammers are like and how to find legitimate online small business lenders, it’s easier to find the right one. All things considered, though, you need to be careful about the people you trust, the terms you agree to, and the interest rates you’ll be left with.
You can trust the right online lenders, but sometimes, it also pays off to listen to your gut. If you don’t feel good about a company, then you probably shouldn’t give them a chance. You can also check out our website and let us compare approved lenders or insurance providers for you and help you make a wise decision.