There is a wide pool of lenders (fintech startups) that offer business loans to businesses. You can apply online onto the lender’s website. Once approved, you can get the cash immediately (this can take place within 24-48 hours depending on the lender). You do not have to visit an office to do the paperwork, which saves you both time and money.
Most lenders have a calculator on their website, which allows the business owners to see how much they will have to repay per month or you can apply a quote instantly. For many, the fees are calculated based on your business’s turnover and the duration of the loan. There are no hidden costs, so you know what you are letting yourself in for – even before applying.
Flexible payment terms
Most lenders give you up to 12 months to pay the loan back. You can also ask for a settlement fee – if you settle earlier. Some lenders give you the option to pay per week, as well as the monthly payment option.
Type of loan
The type of loan you will apply for is based on what your business’s needs are. There are some lenders that provide loans for specific needs, such as inventory or for equipment or other business assets. The different types of financing products available include Bridging Finance, Credit Facility, Equipment Financing, Inventory Finance, Offer trade credit, Refinancing, Supplier Finance, and a Cash Advance.
Applying online can be seamless because it does not require much paperwork. Many lenders ask that you register on their online platform as part of their application process.
The lender will want to get insight into your company’s financial history, so you will be asked to supply documentation such as three months to six months’ bank statements, provide your company registration number or VAT number. You can also expect that a credit check may be done and/ or you might be asked to get your business assessed, including a review of your cash flow.
For the majority lenders, the criteria includes that a business must have been in operation for 12 months; and the turnover must be of around R40,000 per month or the annual revenue of the company must be more than R500,000.
Some lenders cater for specific industries, while some cater for specific needs of a business such as asset finance.
Each lender has a principal amount plus the added fee and interest which equals the standard installment. Depending on the options that are offered by the lender, there are flexible payments which can be done on a daily, weekly or a monthly frequency. The funding period can be between three to 12 months. Some lenders give the option of settlement fees if you decide to settle early.