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The Tech Savvy Entrepreneur & Online Business Loans

Team WaddleTeam Waddle

The future of applying for a business loan is one without paperwork or painfully long approval times.

It’s doubtful that you’ve heard of online business lending or loans unless you’re actively searching them out, in which case this means you’re a fairly progressive tech-savvy business owner, one that will be looked upon very favorably when applying for a business loan.

The landscape for “alternative” or “Non-Bank” business lending is going through an evolutionary change in Australia, one that is going to benefit entrepreneurs dramatically. The biggest issue with current lenders is not considering themselves as a “product” and being a supplier to their customers (borrowers). Truly innovative lenders are waking up to the fact that the future of applying for business loans is the “self-service” option. Everything we do these days is self-serve with no or little intervention from middlemen and lenders need to deliver frustration free ways to get business owners quick answers, remove lengthy processes and provide ongoing financing that doesn’t disrupt the general business operation.

Online lending is still relatively nascent, but it’s growing fast. Strong take-up of cloud computing services such as accounting is allowing lenders to get access to business data faster to facilitate loan underwriting. The tech-savvy business owners are using cloud accounting and taking advantage of online payroll, inventory and CRM services to grow their businesses. Unbeknownst to business owners, they are displaying key signs of a business that new lenders like Waddle are actively seeking out to lend money to.

100% Automated Lending
Lenders like Waddle link into your online accounting data to provide ongoing funding as long term affordable debt

Lenders that analyze online data to assess risk can deploy debt to businesses at a faster rate , reduce underwriting costs, staff and pass on cheaper rates to “good” borrowers.

What is online lending?

Unlike banks, online lenders use algorithms to underwrite small business loans based on traditional factors – such as credit score, revenue and cash flow – and non-traditional metrics, including past payments to vendors, accounting data and social media data. Online lenders fund loans fast by linking into this data in real-time rather than taking traditional loan applications and having them assessed manually. Although all manual processes cannot be removed, online lenders are doing a good job automating any repetitive processes that don’t require human assessment.

This type of business lending is going to be evolutionary rather than revolutionary as it will take some time to educate business owners of the benefits and develop trust behind these new lenders. Banks are very far from ever being replaced and in fact we would say that banks have a major part to play in the future of online lending and can benefit from working closely with these new lenders as they evolve.

Where’s the money come from?

Online lenders typically get the money they lend from several sources. Some lenders raise money through private investors, joint ventures or venture capitalists and then fund the loans themselves, and another type of lender that you might see coming online more strongly in 2016 are peer-to-peer lenders and marketplaces, where individual investors can fund small businesses directly, however the biggest benefit from obtaining working capital from dedicated online lending companies is the time to funding and ongoing support which could potentially be lacking from marketplaces or peer-to-peer lenders.

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Team Waddle brings you blatant marketing, training, "Waddle How To's" & also talks about useful business resources, tips to keep you healthy as well as some occasional silly facts about ducks.