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Compare business loans from direct lenders
Why you might – and might not – want to secure financing for your business straight from the source.
A direct lender can be a great choice when you know exactly what your business needs and have some experience applying for credit products. But if you’re new to business financing, you may want to consider other options to minimize stress and confusion.
How do direct business lenders work?
A direct lender is a financial company that underwrites, processes and funds business loans. In other words, there’s no middleman involved in the application process. When you apply for a loan from a direct lender, your information stays in one place. Direct lenders also typically handle loan repayments.
Direct lenders are best for businesses owners who have the resources to compare lenders and research for themselves which type of financing works best for their business’s needs. It’s also easier to find a loan from a direct lender if you have good to excellent credit, at least one year in business and consistent revenue of at least $5,000 a month.
Compare direct lenders
When applying with a direct lender makes sense
- You know what type of financing you need. Many connection services are designed for borrowers who aren’t sure about what type of financing their business needs. When you know what you want, going directly to a lender can actually save you time.
- You have time to shop around. To find the right direct lender for your business, you need to spend some time comparing what’s out there. Once you’ve narrowed it down to a few, you might want to consider prequalifying so you can make a more personalized comparison.
- Your business doesn’t struggle to qualify for a loan. You’ll have more competitive options to pick from if you have good personal credit, a consistent cashflow and a more established business.
When using a broker or connection service makes sense
- You don’t know where to start. The main benefit of a connection service or broker is that many are designed to help your business find financing that fits its needs – even if you don’t know the first thing about loans.
- You don’t have the time to compare. Some more hands-off online marketplaces help you quickly compare rates that your business might qualify for with several different lenders in just a few minutes. Some can also help you speed up the application process for a fee.
- You need help with the application. Some services go above and beyond to package your application and help you come up with a strong business plan — usually for a fee.
- You don’t have the best credit. Finding a legitimate lender when your business doesn’t meet most lenders’ standards can take extra time. A connection service or broker could help.
- You’re still in the startup phase. Business loan marketplaces can help you find a loan that your business qualifies for and sometimes guide you through the application process as a new business owner. However, they don’t provide the funds themselves.
Can I get a startup loan from a direct lender?
It’s possible for startups to get financing from a direct lender, though it might not be the most easy or efficient way to find funding. Most lenders require you to be in business for at least one year and have a minimum monthly income of at least $5,000.
Using a broker or connection service might be a quicker way to compare lenders that your business qualifies with, especially if you use one that specializes in startup financing. If your business is struggling to qualify for funding, you might also want to look into startup grants.
6 steps to apply for a business loan from a direct lender
One of the benefits of borrowing directly from a lender is that the application process is typically a lot less involved than that of other options. Online lenders in particular often have applications that you can fill out in a matter of minutes and ask for minimal documentation.
- Prequalify. You’ll fill out a quick online form with basic information about you and your business. The lender typically runs a soft credit check that doesn’t affect your score and gives an estimate of the loan amount, terms and rates you might qualify for.
- Complete the application. Your lender might have some additional questions about you and your business. Many have an additional online form, while others might want to speak to you over the phone or ask questions over email. Once you submit your application, the lender often runs a hard credit check that temporarily lowers your credit score.
- Submit documents. Lenders typically ask to see bank statements and tax returns at the very least. Some might also ask for a balance sheet, financial projections, a business plan and more.
- Review your offer and terms. If your lender accepts your application, review the rates and terms one last time.
- Sign the loan documents. Read the contract to make sure you understand how repayments work and what additional fees might apply before you sign.
- Receive your funds. How long it takes to get your funds depends on the lender. Many online lenders can get your business its money within one business day. Others can take up to a few weeks, especially if you’re applying for a large amount.
Borrowing from a direct lender can save your business time if you know what you’re looking for. But it might not be so easy to find a lender that’s right for you if you’re inexperienced. To learn more about how business loans work and to start comparing lenders, check out our business loans guide.
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