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. 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.

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. Keep business finances separate from personal finances.

Your small busi­ness should have a financial identity separate from your personal finances. If you pay invoices with personal checks or credit cards, you run the risk of overcomplicating your finances or not passing an audit. Establish a separate bank account and credit card to man­age all your business spending under your business name.

3. Understand fees (especially hidden fees) from online lenders.

Pay attention to the fine print of any loan application. Ask questions upfront to ensure you understand loan fees, interest, originations and any other costs you’ll pay for your loan. If there’s something you don’t understand, be sure to ask before you sign on the dotted line.

4. Research the qualities of each lender, such as customer service, price and more.

Other than access to capital, what do you need most from your small business lender? Compare your options and read customer reviews. The lowest-priced loan option might not always be the best fit, especially if other small-business owners report hidden fees or has­sles with customer service.

5. Keep an eye on security.

Getting a loan online might seem riskier than going through a traditional bank, but a few basic precautions can help you keep your personal information safe. First, research each potential lender to make sure the company is reputable. Second, con­firm you’re sending any financial information via a secure (https://) website connection. Finally, be wary of any lender that asks for an upfront application fee or an immediate down payment before your loan is approved. Legitimate lenders will package any fees as part of the overall repayment plan rather than charging you upfront.




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