Online lending uses technology to drive borrowing, unlike the traditional loans where you have to meet a representative of the financial institution. However, online loans come with a shorter repayment period and higher interest rates than traditional loans because the online lender takes on more risks. After the 2008 financial crisis, banks and other financial institutions cut down on small business lending to minimize risks. This led to an increase in the number of online lenders to meet the demand for small business loans. According to a 2015 small business credit survey, online lending makes up to 20 percent of loans given to small business owners. Nevertheless, it is vital to have some information about the online lender before you decide to use them. Below are some things to keep in mind when looking for a competent online lender.

First, conduct a cost comparison. Comparing the APRs of different lenders is the only reliable way to compare the true cost of a loan. Make sure that you can meet the terms repayment outlined by the online lender. When calculating the true cost of the loan, including the total amount you will pay back with all the fees and interest rates. Although the APRs of online lenders is higher than that of the traditional lending, it is significantly lower when compared to merchant cash advances. It is advisable to choose an online lender with monthly repayment terms. Enquire about the types of penalties involved and their amounts before you choose an online lender.

You should also determine what the online lender focus on. It is crucial to use an online lender that focuses on providing small business loans to business in your industry. An online lender that focuses on your industry is more likely to have favorable terms because they know how your business is conducted. It will also be easier to verify the reliability of the online lender because you just need to consult with some of the business owners in your industry that have taken a loan with the online lender before. You can read more about online loans by clicking here:

Finally, check for the reviews of the online lender. Reading the reviews of the selected online lender enables you to learn how the lender treats their clients. Pay attention to how the online lender responds to the negative reviews. Choose the online lender with the most positive reviews and the least negative reviews from their past clients. Learn how to tell your credit score status here: