How Getting a Small Business Loan Has Changed
As we’ve noted in past posts, online small business loans have changed, a lot. As the banking and Fintech industries have shifted online, so has the process of obtaining a loan. No longer is your business forced to wait months to find out if it’s eligible for financing; gone are the days of speculating what your loan terms are going to look like, and you can say goodbye to bad credit scores hurting your chances of obtaining business financing. The industry has been evolving so quickly it’s easy to lose track, so let’s bring you up to date.
If you have ever applied for a loan from the bank, you’re probably very familiar with the stacks of documents that need to be filled out. All these documents then end up on someone’s desk to process - you get the idea - it’s slow, but there’s a few things FinTechs, like Evolocity, have done to shake things up.
This seemingly endless amount of paperwork has been replaced by automated software and streamlined for efficiency. This is facilitated with online applications that make applying for a loan drastically less time consuming. In fact, the Evolocity application can usually be completed in less than 10 minutes. Not only is it fast, it’s more accessible. You can complete it from your smartphone on the train ride home if that’s what works for you. Having the following on hand is all you need to make it all the way through:
- Business start date and general business information (such as legal business name and address)
- If you lease your space, lease expiry date
- Online business bank account login information or most recent business bank statements in PDF format (previous 3 months)
- Information on the business owner(s) (such as name, home address and birthdate)
Another element that helps Evolocity keep the application as short as possible is a technology partnership with Decision Logic, using their Instant Account Verification product. This allows for:
- Increased speed – No need to call banks or wait for borrowers to find and provide statements
- Reduced dropouts – Faster process means fewer people getting frustrated and abandoning their application
- Lowered risk – A more complete picture of the borrower leads to higher confidence and approval rates
Custom Built Technology Platforms
Since applications are now often done online, all data gets entered instantaneously into our custom built technology platforms. This not only cuts down on paper, but the amount of paperwork as a whole. Applications are instantly ready to be reviewed, and decisions can be made quickly the applications are already in the proper format. Although this is only one step of the process, similar methods are used company wide.
- Salesforce is our CRM (customer relationship management) platform. It speeds things up by serving as a central storage space for information that the entire team can work off of and collaborate with. Because things move faster behind the scenes, you’re able to get the funds you need quicker as well.
- Equifax helps us by transferring data, such as credit and legal information, securely and quickly.
The process used to determine if your business is eligible for financing has evolved as well. Traditionally, a few key factors were what determined the outcome of your application, notably your credit score and cash flow. In the FinTech era, these are but a few of the many criteria used. Although we explain in more detail with our Guide to securing a small business loan there are two factors that really stand out.
No Personal Collateral Required
Personal collateral is anything you own privately, as in not owned by the business. This could be assets such as your house, your car, etc. According to Investopedia “Since collateral offers some security to the lender should the borrower fail to pay back the loan, loans that are secured by collateral typically have lower interest rates than unsecured loans.” Small business loans with Evolocity are unsecured, meaning you don’t have to put down any personal collateral. It may cost slightly more than a traditional bank loan but it doesn’t come with the risk of losing your personal assets.
Online & Social Media Presence
As a small business owner, you are no doubt aware of how important your online presence can be. Not only does it help bring customers through the door, but a reputable online presence can also improve your business’ chances of qualifying for a loan. Being active online helps to show lenders the potential of your business. Reviews indicate the quality of service, and shows how engaged your customers are. This may come as a surprise to you, but it’s an increasingly standard practice among alternative lenders. Make sure you’re getting the most out of your website with our guide.
Change is good
Thanks to the internet and evolving technology, the pace of business has changed. It’s moving faster than ever so it was only a matter of time until popular financial services, like obtaining a business loan, became available at the click of a mouse. The process of applying for a loan has become increasingly streamlined over the years and more and more small business owners are finding it easier, and quicker to source their business funding online. It’s important to note that online small business loans are somewhat different than traditional bank loans so we put together a list of key differences between the two to help you make sure you can find the best fit for your business.
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