When it comes to running a small business, the old adage is often true: It takes money to make money. Investing in your small business is key to success but sourcing access to affordable business capital can be tricky. However with the emergence of the fintech sector and reliable online lenders, it’s becoming easier than ever.
Until recently, sources of funding for small businesses were limited.
There are some small business grants available through government, academia, not-for-profit and private organizations, but the funds are limited, highly competitive, and often focus on specific demographics or industries that may not apply to you or your business.
Small business loans through traditional banks often have a notoriously lengthy and complicated application process, and high rates of rejection. On the other end of the spectrum were predatory lenders such as payday loans and merchant cash advances charging extremely high interest rates. There were few options in between, meaning many in the Canadian small business community were underserved.
In recent years however, with the rise of financial technology, online lenders like Lendified have entered the Canadian marketplace bringing fast, simple and affordable online lending to entrepreneurs and small business owners.
When should I seek an online loan?
There are typically two situations that call for fast access to affordable capital: Crisis and opportunity.
When opportunity knocks, sometimes the only thing that stands between you and what’s on the other side of the door is access to funds. An opportunity to grow or expand to new markets might require inventory, equipment, hiring new staff with specialized skill sets, marketing and promotion or other investments that require upfront payments. It can be challenging to grow your business without cash reserves to make such investments or to find yourself in a cash flow crunch.
Similarly, small business owners are not always prepared for the unexpected and a variety of scenarios – many outside of your control – can be costly to your business. Breakdowns of essential equipment or cash flow issues, for instance, can interfere with day-to-day operations and your ability to earn revenue unless you have access to capital, and fast.
An affordable small business loan can also be an effective strategy for managing your small business finances and debt. Many entrepreneurs and small business owners use credit cards or personal debt that can incur astronomical charges. A debt consolidation loan for your business can help you restructure payments so you are utilizing the best rates and terms available to you.
Some things to consider when seeking an online small business loan
When choosing an online lender, consider the following:
- Eligibility and application requirements: Online lenders vary in eligibility requirements for small business loans; factors that impact eligibility include time in operation, type of business (i.e. sole proprietorship vs. incorporated businesses) or annual revenue, to name a few.
- Rates and fees: Most online lenders charge a small origination fee, however ensure you choose a lender that is transparent and that there are no hidden fees; your rate depends on the lender as well as your risk profile and credit rating.
- Fair, flexible terms: Seek out a trustworthy online lender that allows you to customize and adjust the repayment terms. You may want to avoid lenders that penalize you for repaying your loan early.
- Specialization: If you are a Canadian small business owner, consider seeking out a Canadian online lender that specializes in small businesses. They may be more likely to understand the unique needs of your business and may offer locally based, hands-on support.
- Timelines: Unlike most traditional banks, online lenders offer quick turnaround to access your capital – time may be of the essence in your moment of crisis or opportunity. For instance Lendified provides you with an instant decision on your loan and you can access your funds as early as the next business day.
TruShield understands the importance of access to affordable business capital – that’s why we have recently partnered with Lendified, who like us specializes in supporting Canadian small businesses and entrepreneurs.
Founded, owned and operated by former senior banking executives, Lendified launched in 2015 as an online lender for small businesses and is quickly becoming one of Canada’s leading financial technology companies. Lendified offers a fully automated, online lending platform designed to provide fast, efficient credit decisions and ongoing loan monitoring. Lendified powers credit risk analysis for organizations globally and serves small businesses in Canada directly through it’s online lending platform, Lendified.com.
This blog is provided for information only and is not a substitute for professional advice. We make no representations or warranties regarding the accuracy or completeness of the information and will not be responsible for any loss arising out of reliance on the information.