6 Tips to Navigate New Online Lending OptionsWith the recent explosion of alternatives to the traditional bank-installment loan, you'll need to consider the following if you're thinking of using a new lender.

ByVictoria Treyger

Opinions expressed by Entrepreneur contributors are their own.

Shutterstock

The lending marketplace has been changing and growing rapidly in recent years, driven largely by the risk aversion and reluctance of banks to issue small-business loans.

TheHarvard Business School Working Knowledgeblog reports traditional banks approved only 14 percent of small-business loans last year. Additionally, a Harris Poll in theWall Street Journal发现,有19%的小企业主to postpone investments, because they couldn't get a loan. Small-business owners can have aparticularly difficult timegetting capital from a bank if they have been in business fewer than two years, if their credit score is less than 640 or if they need less than $250,000.

Related:Why Small Businesses Are Turning to Online Lenders

Fortunately, there are alternatives to the traditional bank-installment loan. Online lending has been a source of innovation and promise for small businesses that are looking to invest and grow. According to stats fromHarvard Business School, while the total volume of small-business bank loans decreased by 3.1 percent in 2014, small-business online lending increased twofold.

But how can small business owners save time and get the most value out of the online lending process? Here are key tips and insights for applying for a small business loan online.

1. Ensure your finances are in order.

Online lending provides more adaptability and flexibility than traditional banks, but you should still provide solid business records confirming your company is viable and can repay the money you borrow. Start with the basics: Make sure you have a registered business name and have incorporated your business with a tax ID number and a business checking account.

2. Use online accounting software.

Digital tools likeQuickBooks,FreshBooksorXerocan help even the smallest business manage their finances with accuracy and efficiency. With your information available digitally, it's easier to track your finances and prove you're a desirable loan candidate. The automation provided byKabbageallows you to connect your online accounting software to evaluate the health of your business, so these online tools can improve the ease and probability of being approved.

3. Keep business finances separate from personal finances.

Your business should have a financial identity separate from your personal finances. If you pay invoices with personal checks or credit cards, you run the risk of overcomplicating your finances or not passing an audit. Establish a separate bank account and credit card to manage all of your business spending under your business name.

Related:Get a $250,000 Loan in 24 Hours. But Beware, It's Expensive.

4. Understand fees / hidden fees from online lenders.

Pay attention to the fine print of any loan application. Ask questions upfront to ensure you understand loans fees, interest, originations and any other costs you'll pay for your loan.

5. Research the qualities of each lender -- customer service, price, etc.

Other than access to capital, what do you need most from your small business lender? Compare your options, and read customer reviews on sites likeTrustPilot.com. The lowest-priced loan option might not always be the best fit, especially if other small business owners report hidden fees or hassles with customer service.

6. Security tips.

Getting a loan online might seem riskier than going through a traditional bank, but a few basic precautions can help you keep your personal information safe. First, research each lender to make sure the company is reputable. Second, confirm you're sending any financial information via a secure (https://) website connection. Finally, be wary of any lender that asks for an upfront application fee or an immediate down payment before your loan is approved. Legitimate lenders will package any fees as part of the overall repayment plan rather than charging you upfront.

There has never been a better time to get small business financing online. Using these tips can help you weigh your options to get the funding you need to grow your business.

Related:Busting 5 Myths About Small-Business Lending

Wavy Line
Victoria Treyger

Chief Revenue Officer, Kabbage

Victoria Treyger is the chief revenue officer ofKabbage, which pioneered the first financial services data and technology platform to providefully automated small-business loans. Kabbage has grown to become one of the top online providers of business working capital.

Editor's Pick

Related Topics

Money & Finance

Want to Become a Millionaire? Follow Warren Buffett's 4 Rules.

企业家是不能过度指狗万官方望太多a company exit for their eventual 'win.' Do this instead.

Business Ideas

55 Small Business Ideas to Start in 2023

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2023.

Business News

Netflix is Hiring an AI-Focused Role—and the Starting Salary is up to $900,000

The streaming giant is looking for a leader in its machine learning department.

Data & Recovery

This $20 Training Bundle Could Help Your Freelance IT Business Grow

Hone your cybersecurity chops with this training bundle.