What are Online Business Loans?
Online business loans are financing products that small businesses can apply for and manage entirely online. They’re offered primarily by online lenders and alternative financing companies, though some traditional banks now offer digital loan programs. What makes them unique is their streamlined application process, faster funding times, and often more flexible eligibility requirements compared to conventional bank loans.
Receiving a small business loan from an online lender does not hurt your credit score during the application process. Small business loans are a type of financing that provides a lump sum of cash at a cost. The easiest small business loans to qualify for are usually online loans and business lines of credit from alternative lenders. Small business owners can apply for loans and get funded faster with online lenders than with traditional lenders.
Fast funding options often include short-term loans, lines of credit, and merchant cash advances. Fast funding options are typically designed to stabilize cash flow and meet immediate business needs.
How do Online Business Loans work?
The process for online business loans is simple. You complete an application through the lender’s website, providing basic information about your business, financials, and funding needs. The lender reviews your application, often using automated systems for faster credit approval. Once approved, funds can be directly deposited into your business bank account—sometimes as soon as the same day.
Business owners can receive funding directly into their bank accounts from online loans for immediate use. Funds can be directly deposited into a business’s bank account, allowing immediate use. Let’s look at some of the most common types of online business loans:
Business Term Loans
A business term loan provides funding for small businesses in a single lump sum. Repayment is made through fixed monthly payments over a set term, and they’re ideal for larger purchases, business expansions, or other long-term projects. Most online lenders provide unsecured term loan options, but some may require collateral.
Business Lines of Credit
A business line of credit provides access to a specific amount of funding that borrowers can tap as needed. Interest is only paid on the amount used, making it a flexible funding solution for fluctuating cash flow or unexpected expenses. Most online lenders provide an unsecured business line of credit. An unsecured line of credit means it doesn’t require putting up business assets as collateral.
Equipment Financing
Equipment financing is typically for purchases of machinery or work equipment and is offered by many banks and online lenders. The equipment itself secures these loans and allows businesses to preserve cash while upgrading essential tools.
Merchant Cash Advances
Merchant cash advances provide businesses with lump-sum financing in exchange for a portion of future sales at a discount. Merchant cash advances offer quick upfront funding in exchange for a percentage of future sales, making them a good fit for businesses with strong daily credit card transactions.
Accounts Receivable Factoring
Also known as invoice factoring, the accounts receivable factoring option allows businesses to sell their unpaid invoices to a lender for immediate cash. It’s useful for companies with long customer payment cycles.
Working Capital Loans
Working capital loans are designed to cover everyday business operations like payroll, rent, and inventory. Working capital loans are designed to cover everyday business operations like payroll, rent, and inventory, often with faster approval times.
Revenue Based Financing
Revenue based financing is tied directly to a business’s monthly revenue, with repayments fluctuating based on earnings. It’s often used by companies looking for more flexible repayment structures. Some lenders might base funding amounts on business annual revenue.
Where can I get an Online Business Loan?
The primary sources for online business loans are alternative lenders, though some traditional banks now offer digital applications and loan servicing. Many online lenders use a streamlined application process, resulting in quicker approval times, and online lenders can provide funds as soon as the same day after approval. Most small business loan providers require at least six months in business, if not more, as well as a minimum monthly revenue to qualify.
Here are some of the top online lenders to consider:
United Capital Source (UCS)
As a small business loan marketplace, UCS provides fast, flexible funding solutions through our network of online lenders. Small business owners get access to multiple financing options – such as SBA loans, term loans, lines of credit, and equipment financing – all in a straightforward application. Our team of business loan experts works with each client to find alternative funding solutions to their specific needs so businesses can get the capital they need to grow, manage cash flow, and take advantage of new opportunities. With UCS, small business financing is faster, simpler, and more personal.
OnDeck
OnDeck is a well-established online lender specializing in short-term business loans and business lines of credit. Known for its fast approvals—often within 24 hours—OnDeck offers loan amounts up to $250,000 and lines of credit up to $100,000. They cater to small businesses with fair to good credit, and repayment terms are typically daily or weekly, making them a popular choice for businesses with steady cash flow. OnDeck is based in New York.
Bluevine
Bluevine offers flexible funding through business lines of credit up to $250,000, with draw approvals in minutes. They focus on speed and convenience, allowing businesses to withdraw funds only when needed and pay interest solely on the amount used. Bluevine’s relaxed eligibility requirements make it a viable option for newer businesses or those with less established credit histories. Bluevine is based in New Jersey.
Fundbox
Fundbox provides fast-access lines of credit up to $150,000, with decisions often made within minutes. Designed for small businesses that need quick working capital, Fundbox emphasizes ease of use and minimal documentation. They also integrate with accounting and invoicing software, allowing for real-time evaluation of your business’s financial health. Fundbox has its headquarters in California.
Credibly
Credibly offers a way to pre-qualify for loans online with a soft credit pull. They provide working capital loans, merchant cash advances, and equipment financing options. Funding amounts range from $5,000 to $400,000, and the company focuses on quick access to capital—sometimes in as little as 24 hours—while accommodating a wide range of credit profiles. Credibly’s headquarters are in Michigan.
What are the qualifications for an Online Business Loan?
Qualifying for a small business loan typically depends on several key factors, including your personal and business credit score, business revenue, time in business, and financial history. The eligibility requirements for small business loans and financing depend on the specific product selected and are based on a business owner’s credit history and creditworthiness.
Online lenders often have flexible eligibility criteria for small business loans. To qualify for a small business loan, you generally need to have over 6 months in business, a minimum credit score of 500, and at least $15,000 in average monthly deposits for the past 3 months.
The application process for small business loans often involves preparing detailed financial statements, a business plan, tax returns, and other supporting documents. After submitting your application, lenders may require documentation, including business bank statements and a copy of your government-issued ID.
How do I apply for an Online Business Loan?
You can apply for an online business loan through our lender network. Below, we’ll explain how to apply for each product and the required documents.
Step 1: Choose the Right Product
The first step is choosing the right product for your needs and goals. This should require decent research, as each product is designed for different financial circumstances and cash flow cycles. Does your business experience occasional dips in revenue? Is your business highly seasonal?
You should also consider the purpose of the funds. How long will it take you to pay off the loan? This will help us determine the right borrowing amount and terms for you.
Step 2: Gather Your Documents
Here are the documents required for the different loan products:
- Driver’scense
- Voided business check
- Bank statements (past three months)
- Business license or certificate
- Business tax returns (past three years)
- Personal tax returns (past three years)
- Credit report or statement of personal credit history
- Income statements
- Current Profit & Loss Statements and Balance Sheet (Year-to-Date)
- Accounts Receivable (A/R) and Accounts Payable (A/P) reports
- Credit card processing statements (length of history may vary)
- Personal financial statement
- Business plan (may not be required in all cases)
- Debt schedule
- List of real estate owned
- Deeds, title, or ownership documentation for collateral/security
- Lease or rent documentation
- Invoice for equipment (for equipment financing specifically)
Step 3: Fill Out Application
You can begin the application process by calling us or filling out our one-page online application. Either way, you’ll be asked to enter the information from the previous section along with your desired funding amount.
Step 4: Speak to a Representative
Once you apply, a representative will contact you to explain the repayment structure, rates, and terms of your available options. This way, you won’t have to worry about surprises or hidden fees during repayment.
Step 5: Receive Approval
If approved, you’ll hear back from us within 24 hours. Funds for Business Term Loans, Business Lines of Credit, Working Capital Loans, and Equipment Financing should appear in your bank account anywhere from 24 hours to one week. It typically takes 8-12 weeks, at the very least, for SBA Loans to receive funding.
What are the benefits of Online Business Loans?
Online lenders typically offer a streamlined application process and can provide funds faster than traditional lenders. Fast business loans can provide funding in as little as 24 hours. This provides quick access to funds. Loans from online lenders also often have lower eligibility barriers, making financing accessible to newer businesses and those with less-than-perfect credit.
Many online business loans offer competitive rates and additional business resources. Flexible terms, multiple loan products, and the ability to manage everything online add convenience for busy small business owners.
What are the drawbacks of Online Business Loans?
Online loans can come with higher interest rates than traditional bank financing, especially for unsecured loans or borrowers with lower credit scores. Some products—like merchant cash advances—have short repayment terms that can impact cash flow. Additionally, certain lenders may charge origination fees, annual fees, or prepayment penalties, so it’s important to review the full cost before signing an agreement.
Online Business Loan Pros & Cons
Pros
- Faster funding than traditional banks
- More flexible eligibility requirements
- Convenient online application and approval process
- A variety of loan products available
Cons
- Higher interest rates for some products
- Shorter repayment terms in some instances
- Potential fees and prepayment penalties
Frequently Asked Questions
Here are the most common questions about online business loans.
How do Online Business Loans differ from Traditional Business Loans?
Getting a small business loan is often easier than securing traditional bank loans in terms of speed and qualification criteria. Online business loans offer faster access to funding compared to traditional banks.
Most lenders look for a personal credit score of 650 or higher, at least 1 – 2 years in operation, and consistent cash flow to ensure you can repay the loan. Traditional banks tend to have stricter eligibility requirements, longer application processes, and slower funding times. Deciding on the best loan option depends on how your business operates.
Are SBA Loans available as Online Business Loans?
SBA loans are among the most popular and trusted options for small business financing. Some online lenders and lending marketplaces can facilitate these SBA loans.
The U.S. Small Business Administration backs most SBA loans. SBA loans can typically offer lower interest rates and longer repayment terms than many other types of funding. The SBA 7(a) Loan Program provides up to $5 million in funding. The SBA 504 Loan Program focuses on long-term, fixed-rate financing for major assets like real estate. The SBA Express Loan allows for loan amounts up to $500,000 with quicker decisions. The SBA Microloan Program provides microloans up to $50,000 through nonprofit community-based lenders.
SBA loans require preparation of detailed financial statements, a business plan, tax returns, and other supporting documents. Qualifying for an SBA loan starts with meeting the basic eligibility criteria set by the SBA. The application process for SBA loans typically involves more paperwork than alternative loans. SBA loans require more documentation but come with benefits, including lower rates and longer terms.
What are the costs of Online Business Loans?
Online business loan costs vary by lender, loan type, and borrower profile. Factors include interest rates, loan terms, fees, and repayment schedules. Before applying for a small business loan, you should consider whether the capital will help your business grow or survive a crisis.
Can I get an Online Business Loan with Bad Credit?
One of the most significant advantages of online lenders is their willingness to work with borrowers with lower credit. Online business loans can be more accessible for borrowers with lower credit scores compared to traditional lenders. Bad credit business loans may carry higher costs, but can still provide essential funding to keep operations running or support growth.
Online Business Loans – Final Thoughts
Online business loans give small business owners a faster, more flexible way to access the capital they need. Whether you’re covering day-to-day operations, upgrading equipment, or investing in a growth opportunity, the variety of financing options available online means you can tailor the funding to your specific needs.
While these loans can come with higher costs than traditional bank products, the speed, convenience, and accessibility often outweigh the drawbacks—especially for businesses that need cash quickly or have challenges meeting conventional lending requirements. By understanding your loan options, eligibility requirements, and potential costs, you can choose the best online business loan to keep your business moving forward.
Contact us if you have more questions about online business loans or if you’re ready to apply for a small business loan. Our alternative financing experts can help you find the best funding options for your needs.
