By Maricel Tabalba
Even though approvals for small business loans have increased drastically in the past few years, some companies may still have a difficult time borrowing money from traditional banks, including tradesmen, plumbers and construction professionals who oftentimes are not aware of all their options. Fortunately, there are many online lenders who are offering sizable funding for small business owners.
Recognized as one of the country’s biggest fastest lenders, Kabbage is for small online businesses that are unable to meet the qualifications set by other lenders. In most cases, Kabbage can disperse up to $150,000 almost instantly after qualifying for the loan. The repayment term for this fast loan is six months with an APR as high as 90 percent. Kabbage is ideal for those struggling to get their feet off the ground and are unable to launch their businesses the traditional way.
Wells Fargo has recently redefined traditional lending as the corporation has lent approximately $34.8 billion in small business loans in the first quarter of 2015. The top two lending options at this institution are unsecured business loans and unsecured business line of credit. An unsecured business loan offers anywhere from $10,000 to $100,00 in capital with interest rates ranging from 6.50 to 22.99 percent. On the other hand, an unsecured line of credit offers $5,000 to $100,000 to use for cash flow. The interest rate for this type of loan is usually the prime rate plus 1.75 percent. An unsecured business loan and an unsecured line of credit do not require collateral, so these lending options are perfect for small businesses that do not want to risk any of their personal or business assets.
More established small businesses should consider using a peer-to-peer lender, such as Funding Circle. This lender offers big loans that are between $25,000 and $500,00. The rates of these loans can range from 5.49 to 27.79 percent. An established business that has a yearly revenue of at least $150,000 are eligible to apply for this hefty funding. Funding Circle will verify income with an applicant’s tax return and business bank statement.
Similar to Funding Circle, OnDeck is another online lender that can lend funds up to $500,000 in as little as one day. As a result, this lender is recommended for established businesses that are seeking funding immediately. The lines of credit typically have APRs from 13.99 to 39.99 percent. Smaller businesses may also be able to benefit from using OnDeck as the company also offers term loans for smaller amounts.
Fundation is an online lender that provides a relatively large sum of money fast. In as little as three days, a small established business can receive as much as $150,000 for working capital loans and $500,000 for business expansion loans. Because of the quick sizable funding, the application is a bit more complex than other lending options discussed. Fundation only considers businesses that have been in operation for at least one year for its funding. Additionally, the applicant must have a business with three full-time employees.
While funding a company has its challenges, these loan options can alleviate much of the stress, especially if the recipient manages the money properly. Remember that this money is for your company to kick off and to use it wisely for your needs and goals. Regardless of the lending option, it’s extremely important that small business owners perform adequate research so that they choose the appropriate funding.
Maricel Tabalba is a freelance contributor for Credit.com who is interested in writing about personal finance advice for Millennials and college students. She earned her Bachelor of Arts in English with a minor in Communication from the University of Illinois at Chicago.