A Quick Guide to Online Business Loans

Applying for an online business loan is now one of the most common ways your organisation can secure funding. You should make sure you go for a trusted lender and carefully compare your options before starting your application.

Connor Campbell Published on 10 June 2022.
A Quick Guide to Online Business Loans

If you or your organisation has considered applying for funding, you have likely looked into getting an online business loan.

But what do you need to know before you start your application? We’ve put together a guide to help you navigate applying for a business loan online, including how to find a lender you can trust.

» MORE: What is a business loan?

Online business loans at a glance

  • Not all lenders in the UK, on and offline, are authorised by the financial regulatory body, the Financial Conduct Authority (FCA).
  • How much you can borrow will vary depending on the lender, and your own eligibility, but loans typically range between £500 and £500,000.
  • Online business finance brokers are not the same as online lenders. It is important to familiarise yourself with the difference.
  • Getting all the details and documents you will need to provide at hand before you start your online application can help speed up the process.
  • Carefully comparing online business loans can help make sure you choose the right option for your specific needs.

Can I trust online business loan lenders?

There are a huge range of online business loan providers, from long-established high street banks and their challenger rivals to those internet-only lenders you may not have previously heard of. And not every lender will be as trustworthy as the next.

If you are worried about the legitimacy of a lender, there are a few things you can look for to try to put your mind at ease:

  • Not all lenders of business loans need to be authorised by the Financial Conduct Authority (FCA). It depends on the type and value of the loan. Take extra care to understand why a firm is not regulated and how this might impact you.
  • They are easily contactable. A good sign is if you can find the lender’s phone number. It might also be worth giving it a ring, to make sure it connects you to what you are expecting.
  • They have a good number of online reviews. While even the most established lender may have plenty of bad reviews online, the volume of reviews, rather than their quality, can be a way to verify that the provider is a legitimate organisation. Looking at reviews can also help spot any potential red flags, while allowing you to make a more informed decision about which online business loan lender to choose.
  • They adhere to basic online security standards. Compliance with General Data Protection Regulation (GDPR) and an SSL certificate can act as signs that the lender takes your, and its own, web security seriously.

These checks aren’t foolproof, but they can hopefully lead you towards an online lender that you feel comfortable doing business with.

» MORE: How do business loans work?

What is the difference between an online business loan lender and a broker?

When searching for online business loans, you may also come across a number of business finance brokers. It is important to know the difference before choosing which path to go down.

A business finance broker is essentially a go-between, with you on one side and the lender on the other. For a price – whether that is an upfront fee, commission from the lender or both – they can provide you with an overview of your various business finance options, potentially advise you on which product best suits your needs, and can help with the application process.

If you apply directly with an online lender, on the other hand, you will have to take care of the process yourself. The lender will then provide you with the funds if your application is successful.

There are benefits and drawbacks to both methods of obtaining a business loan, so it is important to weigh up which option best suits your specific situation.

» MORE: Do I need a business finance broker?

How much can I borrow with an online business loan?

The amount available through an online business loan will depend on which lender you choose, and your own eligibility.

Borrowing can start from as little as £500, for example if you are applying for a start up loan. The maximum amount you can borrow, meanwhile, will vary. However, many online lenders have an upper limit of £500,000.

» MORE: Why do businesses need finance?

How do I apply for an online business loan?

It is relatively simple to apply for an online business loan. At its most basic level, it will involve you filling out an online application form, and providing the lender with the details and documents they require. This can potentially include a business plan, monthly bank statements, and a cash flow forecast. You can make this process a bit easier by getting all of the required information to hand before you start your application.

Once you’ve submitted your application, the lender will run a credit check, possibly on both your business and personal accounts, and then decide whether or not to offer you a loan.

Before you start applying for a business loan online, it is a good idea to thoroughly compare the various options available. You should keep in mind:

  • the reputation of the online lender
  • the minimum turnover the lender requires
  • whether it is a secured or unsecured loan
  • the interest rates on offer
  • how much you can borrow
  • how long the repayment period is
  • how much the monthly repayments will cost you

» COMPARE: Business loans

Image source: Getty Images

About the author:

Connor is a writer and spokesperson for NerdWallet. Previously at Spreadex, his market commentary has been quoted in the likes of the BBC, The Guardian, Evening Standard, Reuters and The Independent. Read more

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