The following excerpt is from Entrepreneur’s book Finance Your Business. Buy it now from Amazon | Barnes & Noble | iTunes
Small-business owners can have a particularly difficult time getting capital from a bank if they’ve been in business fewer than two years, if their credit score is less than 640 or if they need less than $250,000. Fortunately, there are alternatives to the traditional bank-installment loan. Online lending has been a source of innovation and promise for small businesses that are looking to invest and grow. According to statistics from Harvard Business School, although the total volume of small-business bank loans decreased by 3.1 percent in 2014, small-business online lending increased twofold.
But how can small-business owners save time and get the most value out of the online lending process? Following are six key tips and insights for applying for a small-business loan online:
1. Ensure your finances are in order.
Online lending provides more adaptability and flexibility than traditional banks, but you should still provide solid business records that confirm your company is viable and can repay the money you borrow. Start with the basics: Make sure you have a registered business name and have incorporated your business with a tax ID number and a business checking account.
2. Use online accounting software.
Digital tools like QuickBooks, FreshBooks or Xero can help even the smallest business manage their finances with…