Online lender

Is it Safe for Your Startup to Use an Online Lender?

As a business owner, you surely know there are plenty of scammers lurking, keen to steal your identity or separate you from your cash. Equally concerning, some sites may have no criminal intentions but may not be real lenders either, with the sole purpose of gathering and selling leads. So how reputable is an online lender and how safe is it to submit your details to one?

Finding a safe online lender

Of course, it’s difficult to generalize: some online lenders are far more reliable than others. By conducting the proper research, you can minimize the possibility of sending sensitive data to a fraudster. But what should you be looking for?

Third-party verification

If the lender is accredited by a government body, that’s a pretty clear indication it’s a legitimate business. Any online lender that seeks such verification clearly has a strong interest in building and protecting its reputation, and as such is likely to be a good company to deal with.

Related: Benefits of a Short-Term Online Business Loan

Physical address

Most legitimate finance companies will list a physical address on its website, even if they prefer to conduct business online. What’s more, you can easily verify the address via an internet search – as well as discover lots of useful background information about the business.

Reviews from other customers

A reputable online lender that has been in business for a while should have a number of reviews from customers. Of course, these won’t all be positive, and it’s worth bearing in mind that people are more likely to post if they’re dissatisfied. Nonetheless, if there are no reviews (or if they don’t appear to be genuine) this is a pretty strong red flag to stay away from the company.

WHOIS check

By using WHOIS, you can easily check who really owns the company’s website and how long it has been online. This way, you can quickly find out whether the business is genuinely an online lender and how long it has been trading.

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Why should you borrow online?

Online lenders often apply completely different criteria from banks when processing loan applications. Since the financial crash of 2008, banks have significantly tightened their lending criteria, and where they once might have been overly blasé have now become extremely risk averse, applying stress testing so stringent that its conditions are unlikely to be replicated in the real world.

In other words, where a bank is likely to say no, an online lender could easily give you the funds you need. Further, online lenders offer more innovative solutions, including emergency loans (with the money inside your account within 24 hours if you have a sudden cash flow crisis), asset-based finance (allowing you to borrow against the value of your premises, plant or equipment) and invoice factoring and discounting (enabling you to borrow against the value of your invoices as soon as you issue them, with repayment being made when your customers pay you).

Further, reputable online lenders will take all necessary steps to protect your confidential data secure – their business depends on it, just as your business could depend on them.

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