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(aka - No B.S. Talk About Small Business Loans )

Online Business Loans

With innovations in financial services and cloud computing, you now have options to get a fast approval for business loans online. Here we'll explore key aspects of these relatively new and very convenient options for small business financing online.

Table of Contents:

What is an online business loan?

Whether you’re just starting your business, growing an existing business or simply seeking help with cash flow for operations, it’s important to have access to business funding when your business needs it.

Historically, if you wanted a business loan, you had one option - talk to a local bank. These traditional bank lenders were generally pretty conservative in their lending guidelines and practices, limiting access to working capital for many small businesses.

It wasn’t that long ago - just 20 years or so - that the internet offered little help for a small business needing to find a business loan or line of credit. However, in the last 5-10 years in particular, online lending platforms have evolved to provide access to online loans offering many advantages to small business owners.

An online business loan refers to various types of financing for small businesses that can be obtained through an online application and often a completely online approval and funding process. Online small business loans include term loans, lines of credit, cash advances, working capital loans and equipment loans.

An online business loan refers to various types of financing for small businesses that can be obtained through an online application, approval and funding process. These include term loans, lines of credit, cash advances, working capital loans and equipment loans.

How are online business loans different from traditional bank loans?

With an online small business loan, you can often apply in minutes and get a decision within hours. It’s possible with some online business lending for your business to apply and get funds the same day. Any required documents can usually be uploaded securely through a website. Once you’re ready to close, documents can be signed digitally.

By comparison, traditional bank loans require more time, more paperwork and quite a bit more hassle. The application process usually takes a number of days and requires providing many documents. Approval can take anywhere from one week to many weeks. Sometimes, you have to wait for a lender’s “loan committee” to meet and decide on your loan. (Yes, this still happens at many banks today!) Worst of all, you might not see your funds for many weeks after you apply.

What are key characteristics of online business loans?

Online business loans have some key characteristics that offer a number of advantages over traditional small business loans.

Fast Online Access to Capital

The automated steps in online business lending are a good fit for small business owners' typically very busy schedules. Small business owners often need to move fast, either to take advantage of an opportunity or simply to meet unexpected cash flow needs. Speed is one of the biggest benefits of business online loans.

Reviewing the Big Picture

When you apply for a business loan online, lenders often use a variety of searches of real-time information to get a big picture view of your business. When reviewing your application, lenders can draw from background searches, credit searches, industry sources and dozens of other sources. This allows them to pull together lots of information on your business and industry quickly and not rely only on the few items you provide.

Wide Range of Options

With online business loans, you can usually access a wide range of financing types, including many sizes and repayment terms. Some lenders offer financing as low as $1,000 while others have a minimum of $25,000 or $50,000. In some cases bad credit is just fine. Some loans require repayment in months while others allow repayment in 1-3 years. The wide range of options allow online loans to be a great solution for a wide array of business needs that might arise.


Some online lenders offer lines of credit and others offer term loans or equipment loans. Business lines of credit in particular offer a very flexible source from which businesses can draw multiple times up to the total line amount. Business lines of credit give you the ability to choose how much you want to borrow and how much you want to use at any given time. While business lines of credit are not new, the super convenient, easy way you can now apply and receive access to business lines of credit is very new.

Improve your Company's Credit Rating

Small business funding online is possible for owners and businesses with less than perfect credit. This means a business that cannot qualify for some loans might still qualify for an online business loan. In addition to providing needed cash for your business, an online business loan can help improve your business and possibly your personal credit rating.

Once you show a good history of making on time payments, you become a more attractive customer for all kinds of lenders. By demonstrating that you can manage your financing well, your cost of borrowing can go down. You may also be able to borrow even higher amounts in the future.

How do I apply for an online business loan?

When you are ready to apply for an online small business loan, you will either be applying directly on a lender website or often you will apply online with a financing broker who can take care of multiple online applications for you.

To start, you will need to provide some basic information about the owners and the business. Sometimes this information is used to prequalify you before supporting documents are required. Other times, you will be asked for some documents right when you provide the preliminary owner and business information.

As owner, you will be asked for your home address, phone, email, and social security number. Most online lenders will use your social security number for a “soft credit pull” to avoid impacting your credit score. Only once you accept a loan offer, and with your permission, will some of them do a full credit inquiry.

For the business, you’ll be asked for its tax ID, physical address, phone and website (not all businesses have all of these), plus time in business and nature of the business. Some lenders require a certain time in business, such as 6 months or 1 year or more. If you own less than 50% of the business, you will be asked for information on additional owners.

In addition to owner and business details, you will be asked to provide some basic financial information about the business. Many lenders ask for business bank statements to show the amount and frequency of revenue coming in. In many cases, this is all that’s required for approval.

Who offers online business loans?

Online small business loans are offered by some banks but more often offered by non-bank lenders. Even though many banks have been around for years, they have not been as quick to adopt new technology compared to newer financial companies. This is why you see so few regional and national banks offering internet small business loans.

Many of the online business loan providers are what are called “fintech” companies. “Fintech” is an umbrella term referring to the intersection of financial services and technology. Many of the leading providers of online business loans are these "fintech" companies - financial services firms started in the last ten years with the express goal of using technology to deliver financial services.

Some “fintech” platforms are not actually lenders but are middlemen offering to connect small businesses with suitable business lenders. There are many such platforms that act as matchmakers, however, rarely are they the best option for you as a small business owner. These sites don’t usually effectively match businesses to the best lenders, and they only offer a few alternatives based on whoever is paying the platform fees for referring you as the business owner.

You are usually better off working with an experienced, trustworthy loan broker who can get to you know your business a bit before connecting you with one or more specific online business lenders.

Are online business loans safe?

The short answer is yes, they definitely can be. There are many reputable companies offering online business loans, and these loans can be obtained very safely.

With that said, the longer answer is that not every online business loan is safe. There are hundreds and hundreds of companies offering small business loans online, and not every single one will be a safe option for your business.

Your safest course is to work with a trustworthy and experienced financing broker who can connect you with safe, reputable lenders. With the hundreds of lenders out there, part of the job of a good financing broker is to know the best and most trustworthy lenders. A good broker may also help you save money through finding lower cost options than you might find on your own.

Are there online business loans for bad credit?

Yes, there are many online business loans for bad credit borrowers. This can mean an owner with weak credit, such as scores under 600. This can also mean a business that has less than stellar business credit.

Many types of online small business financing are based not so much on the credit of the owner and the business but instead on the recent financial results of the business. Many lenders look at recent bank statements to see the sales coming in, and they will make financing offers even with bad credit.

One harsh reality of getting a loan of any kind with bad credit - your cost will be higher and loan term may be shorter. This is how lenders offset the risk of weaker credit. They charge higher interest rates, or require a higher payback rate. They also shorten the payback term to as little as 4-6 months, as they believe they are more likely to be repaid in a shorter term.

Can I get online business loans without collateral?

Yes, you can get online business loans without collateral. In fact, most online small business loan options, including business lines of credit, provide financing without requiring collateral. These loans are most often made based on the performance of the business, and lenders do not look for collateral as security.

This is different for equipment loans. Some equipment loan lenders do offer online equipment loans, and those will require as collateral whatever equipment is being purchased. Usually these loans do not require any additional collateral beyond that.

How do I pick an online business lender?

As mentioned above, your best plan is usually to work with an experienced and trustworthy financing broker such as Everfund. There are hundreds and hundreds of online business lenders, each with different products, different qualifying criteria and different application processes. Part of the job of a good financing broker is to stay aware of all the best lenders in the marketplace and what they offer.

Working with a financing broker can save you lots of time. With one application, a broker can then submit applications for you to many different lenders if necessary. A good broker can also save you thousands of dollars by helping you get lower cost financing than you may find on your own.

If you do decide to seek an online business loan on your own, you will have to apply to each individually to see if you qualify. (They seldom make their qualifying criteria known.) Be sure to look for validation that the lender is experienced, competent and safe. You can look for online reviews (TrustPilot, Google, etc.) as well as mentions of the company in the press or on news reporting sites such as Forbes, Fortune, CNN, CNBC, and other known reporting sources.


About the Author

Mike Spitalney

Mike Spitalney is the CEO and founder of Everfund. Mike is on a mission to help small businesses get the best financing for their needs and avoid the confusion and complexity of today’s lending world. Over two decades, Mike and Everfund have helped thousands of businesses thrive and grow using a variety of short and long-term loan options, from working capital loans and lines of credit to SBA and bank loans and commercial mortgages. Outside work, you'll usually find Mike outside running, hiking or biking.


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