How to be safe while applying for a business loan online?

A successful business is a blend of a unique idea supported by sufficient funds. Every businessperson reaches a stage, where he/she requires funds to support his/her business. This requirement can be either to start a new venture or to expand already established business. Many times people in business take the help of business loans to fulfil their needs.

Many financial institutions provide online business loans these days. If a businessperson fits under the eligibility criteria, getting a business loan for new business becomes easier. Small business loans are also provided for small funding requirements. Many banks and NBFCs offer business loan online to fulfil the financial needs of the entrepreneurs.

Getting a business loan online is a straightforward process. However, you must have read cases where people were tricked by internet scams. You need to be alert while applying for a business loan online. This article will guide you on how to be safe while applying for a business loan online.

Identifying internet frauds

The cases of online scams are increasing these days, as many people have become victims of online frauds. Internet scammers have specific patterns, and you can easily spot them by being careful. Internet scammers generally take help of unsolicited emails, texts or pop-ups on webpages. Never trust such good-to-be-true loan offers without checking their authenticity. Here are some tips to spot and avoid internet frauds,

  • Before proceeding with the loan offer, confirm the physical address of the lender. Never trust on the P.O. Box number provided by them. 
  • Many brokers on the internet will assure you to find out a suitable lender matching your funding requirements. If any of such broker asks you to do this on the pretext of payments like registration charge or down-payment, the best thing to do would be backing down from the deal.
  • Many internet scammers lure borrowers by promising instant cash without any credit check or application.

Identify the genuineness of the lender

Confirming the authenticity of the lender is crucial while applying for a business loan online. Let’s understand how you can find out the genuineness of the lender,

  • The simplest things to do is checking the feedbacks of previous customers on different forums. You should avoid transactions with a lender when their customers have given more negative reviews than positive.
  • Check that if the website of the lender has a security certificate. The site starting with ‘https’ are secure websites, as ‘s’ in the http stands for security.
  • You can run a background check of the website with the help of the WHOIS database. This database will provide you with crucial information regarding the website like date of launching or ownership etc. you should be cautious while dealing with relatively new websites.
  • The lock icon at the starting of the URL address of the website is a sign that data provided by the website is encrypted. Transactions of such websites are generally safe.

New Vs Traditional lenders

A new type of lender is emerging in the market that provides quick loans online. Such lenders have devised different methods to determine the creditworthiness of the applicant. Rather than the credit score, these lenders check the social media activity or online sales receipts of the company before disbursing business loans. Though they provide quick loans, they charge high-interest rates and processing fees on them. On the other hand, financial institutions like banks or NBFCs lend loan in traditional ways by considering the credit score of applicants. Thus, the interest rates are comparatively low than a new type of lenders. Therefore, you can get a good deal from traditional lenders.

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Author: Eddy

Eddy is the editorial columnist in Business Fundas, and oversees partner relationships. He posts articles of partners on various topics related to strategy, marketing, supply chain, technology management, social media, e-business, finance, economics and operations management. The articles posted are copyrighted under a Creative Commons unported license 4.0. To contact him, please direct your emails to editor.webposts@gmail.com.