Finding Financing For Your Small Business: Online Vs Local Lenders

FINDING FINANCING FOR YOUR SMALL BUSINESS: ONLINE VS LOCAL LENDERSAccess to adequate and timely funding is the lifeline of any small business that aspires to grow. In the past, small businesses have depended on assistance from family, friends, and “fools” to fund their small business growth ambitions when they found that they were ineligible to borrow from local lenders.

Finally, many small businesses could breathe a sigh of relief with the emergence of online lenders who threw out of the window certain restrictive measures of local lenders that locked some of them out of the lending market.

But are online lenders better than local lenders for your small business? Besides the fact that online lenders have a Business Loan Calculator on their online page, do they offer much else? That’s what we’ll examine in finer detail.

Main Differences Between Online And Local Lenders

You’ll have to look at what’s important for your small business to determine whether you’ll go online for loans or you’d rather pursue local lenders. If speed and convenience seal the deal for you, then online lenders are a perfect fit. If human interaction means the world to you, local lenders may be a tempting option. Let’s burrow in.

Online lenders

Numerous fintech lenders such as Camino Financial offer speedy access to small businesses to boost their operations. They base their loan appraisals on automated data-driven algorithms that make lending decision-making faster and objective.

Pros of online lenders

  • Faster rates of approvals and drawdown of small business loans that may be within 24 hours. This makes it easier for your business to respond faster to funding gaps or take advantage of emerging opportunities requiring immediate financial commitment.
  • Can ideally offer loan pre-qualifications that do not affect your credit
  • Online lenders are available 24/7 since the lending process is automated and data-driven.
  • In some instances, they offer cheaper loans due to low operational costs; that’s because they pay little in salaries and don’t need brick-and-mortar offices as lending processes are automated.
  • Online lenders offer innovative financial solutions that integrate seamlessly with mobile technologies and apps and other forward-leaning gadget-driven devices.
  • Secure systems that keep transactions safe.
  • A Business Loan Calculator on the borrowing platform makes it easy to be clear on the cost of the borrowing; you can therefore easily compare offers from several online lenders before committing.
  • Online communities on platforms of digital lenders provide opportunities for businesses to create valuable networks.

Cons of online lenders

  • Some consumers may be uncomfortable submitting personal financial details online.
  • Preference for human interaction through the loan application process.

Local Lenders

Local lenders offer a personalized face-to-face interaction which means they can empathize with the borrower and offer valuable local knowledge.

Pros of local lenders

  • You can leverage existing relationships to negotiate preferential rates and favorable repayment terms.
  • The personalized approach offers much guidance throughout the loan application and approval process.

Cons of local lenders

  • Lengthy approval process and funds drawdown period after approval that may take several days or weeks. Delays may cause you to lose out on an opportunity as a small business owner.
  • Usually, the pre-qualification process involved that allows you to know your borrowing terms and rates impact your credit
  • The cost of the loan may be higher thanks to the operational costs of a brick-and-mortar office.

Why You Should Consider Taking The Online Lender Option

Consider an online loan over a local lender if you find yourself in the following scenarios:

  • You need financing fast
  • Do not have the time to visit a local lender due to a busy work schedule or if you operate remotely.
  • As shown on your Business Loan Calculator, the cost of borrowing gives a better deal with online lenders.
  • Are ineligible for conventional loans due to stringent requirements such as credit history; some digital lenders can advance ITIN loans even if you’re an immigrant who is ineligible for a Social Security Number (SSN).

Some Of The Most Common Online Lenders

  • Camino Financial
  • Upstart
  • Sofi
  • Payoff
  • One Main Financial
  • Rocket Loans
  • Marcus by Goldman Sachs


If you prefer an in-person meeting to discuss your business loan application, you’d be comfortable with local lenders. However, if you’re looking for sharp rates and a quick funding option, then you need to reach out to an online lender, check if you qualify, and apply for a loan for your business.


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