How to apply for an SME loan online
The specific process of how to get a small business loan online will depend on the lender. Online fintech lenders leverage technology to simplify the process of completing an online SME loan application.
With Moula, for example, you complete a loan application online in around seven minutes. In addition to your online application, we safely and securely analyse your bank account or accounting data (after receiving your permission, of course) to make a lending decision.
We base lending decisions on factors such as your business profile, time in business, and transaction volume. We also check your credit score to help us make a responsible lending decision and always ask permission before running a credit check.
Based on this information, we can make a lending decision within 24 hours. The interest rate (fixed, not variable interest rates) will depend on the analysis, your credit score and other factors. Loan terms are from 12 to 24 months. The only fees and charges are an establishment fee of 2% of the loan amount.
Once you have received your small business loan online approval, the funds are transferred to be available by the next business day.
What are the best online small business loans?
This will depend on your situation and needs. The best loan is one that helps you achieve your business goals and one that you can comfortably repay. Whether a business loan is to cover a cash flow shortfall, purchase equipment or stock up on inventory, there should be a sound business case for the finance.
Read the fine print when getting an SME loan online
Carefully check the terms and conditions before making a decision. For example, some small business lenders charge what’s called ‘scheduled interest’. This means you need to pay the loan interest for the full term, even if they repay the loan early. If you get a loan with an 18-month term, for instance, and you decide to repay the loan at 12 months, you will still be charged interest for the full loan term.
With Moula, you only pay interest up to the end of the relevant fortnight in which you repay the loan. At any time, our online account tools will show you exactly how much you need to pay to settle the loan.
Also, check how the interest rate is quoted. Some business lenders use simple interest rates when advertising their business loans. Simple interest is calculated as if the full loan amount is paid off in one payment at the end of the loan term. It doesn’t take principal repayments during the loan term into account. But most business loans have regularly scheduled payments that reduce the amount outstanding over the term of the loan. So presenting a simple interest rate hides the real cost.
The annual percentage rate (APR) is the rate used to calculate the true cost of a loan. For example, if you translate a small business loan quoted at 18.95% simple interest into APR and base it on fortnightly repayments, the APR of the loan is actually 33.55%. With our aim to be transparent, we use APR.
Online finance options continue to grow
An increasing number of finance options are available online. Besides online business loans for online approval, other forms of finance can be applied for online, including invoice finance, business credit cards, equipment finance, cash flow and personal loans.
Check out our business loan calculator to get an estimate of loan interest and principal repayments.