Loans for Your Online Business

An online business loan works in the same way as business loans for companies that do not operate online. Business loans provide owners with the working capital necessary to fulfill their dreams and produce a product or service. That a business is online makes little difference to a bank, lender or other investor provided that the business is a viable and profitable concern.

Online Businesses

Online businesses engage in various forms of e-commerce and enterprise. Online businesses can also provide consulting, financial and other services that do not require a physical presence for transactions. Businesses such as eBay and PayPal work exclusively online and are very successful offering their products and services to consumers.

What Lenders Look For

Banks, lenders and investors look for strong business plans and financials as a basis for any loans that they wish to extend. This requirement is no different for an online business. The most important factor that a lender looks to is the future profits of the business and the way in which the company will make money and be able to service any debt obligation. Both existing and start-up online business will go through the same process of determining how they will establish a customer base, make money and expand into new business opportunities.

SBA Loan Guarantees

An online business may also gain access to loan guaranteed provided by the U.S. Small Business Administration (SBA). The SBA 7(a) loan program is designed to assist small companies with obtaining necessary start-up or expansion capital. The SBA does not lend money directly to a business but guarantees up to 90 percent of a loan for a lender. Qualifying for an SBA loan guarantee program such as the 7(a) may be one available opportunity for an online business.

How an Online Business Approaches Loans

An online business should begin the process of looking for available loan financing by viewing their business in the same terms that other businesses do. This means that an online business must think the same way the “brick and mortar” businesses do and outline their mission statement, financial goals, projections and marketing and strategic plans. Without this level of thinking captured or documented, it is difficult for a lender to see an online businesses vision or fund it in a way that is either adequate or sufficient to help the business meet its needs.

Banks, private lenders and the SBA all can play a role in helping an online business locate and secure loans for the business. Each should be contacted to discuss the requirements for the different business loan opportunities they have and the process or qualifying for any available funding.