Did you know, that typically businesses:
- Leave only 7 days to access funds
- Spend less than 1-hour researching funding options
- Apply to only 1 lender
Financial technology, often shortened to ‘FinTech or fintech’, is the new technology and innovation that is increasingly competing with mainstream banks in the delivery of financial services. It is an emerging industry that uses technology to provide access to business finance particularly crowd equity raising and online business loans. Following the financial collapse of 2008, the fintech sector was formed out of the vacuum of credit availability from the banks and the advent of online technologies. It is not always the best solution, however. Here is a simple breakdown of the pros and cons of fintech solutions and where perhaps you should consider your local Responsible Finance Provider as an alternative loan solution:
|An online application is fast and convenient||No personal service or face-to-face engagement|
|Provides an alternative to traditional lenders||No relationship management|
|Often do not require a business plan||No repayment flexibility|
|Getting an initial quote will not affect your credit rating||Possible hidden charges and higher interest rates interest rates than first assumed|
|Widened the choice of providers||Hard to distinguish reputable online lenders from predatory online lenders|
Online lenders also usually require 2 years of profitable accounts and expect you to have the collateral to support full personal guarantees.
In summary, taking out an online business loan might feel easier – if you are successful – but it is always worthwhile searching out a range of alternatives. When you need money you would normally visit your bank; and whilst banks still offer business loans, today you can also contact your local Responsible Finance Provider who will have a range of options for start-ups and growing businesses. RFPs are specialists in locally led-lending, flexible and relationship-based business lending.