(Newswire.net — September 13, 2016) — Many small business owners go through the long and complicated process of applying for a business loan from a traditional lender, like a bank, only to find out that they do not qualify. This can be particularly devastating for entrepreneurs who want to move quickly on an innovative business idea or seasoned small business owners who can’t quite keep up with their expansion needs.
Much like it has in other areas of our lives, technology has revolutionized the way that small business owners obtain funding. Fintech, or financial technology, has made it possible for small business owners and entrepreneurs to get the funding they need to start, run, or expand their businesses. Fintech organizations offer more flexible funding options, such as revolving lines of credit, while still ensuring that the individual’s private personal and business information remains safe and secure.
How Fintech Changed the Face of Small Business Lending
In 2015, fintech startups took the business world by storm when they began to offer an alternative to other institutions in the traditional financial services sector. Using an online and digital-based approach, fintech companies offer a range of services including payment processing, lending, and wealth management. These tech-focused financial companies transformed the way that entrepreneurs did business by allowing them to access the vital services that mostly gave preference to larger companies.
The fintech industry paved the way for alternative online lenders who could now make it easier for entrepreneurs to obtain capital to start, run, or expand business operations. While the traditional lending application process involves a lot of paperwork and waiting, fintech organizations took advantage of available technology to make the funding process easier and faster without compromising security. This technology has created new opportunities for small business owners to get the funding they need to help their businesses thrive.
Making the Loan Approval and Funding Process Faster
Perhaps one of the biggest benefits of fintech companies is that they make the loan approval and funding process faster for small business owners. Unlike traditional lenders, fintech organizations put the available technology to use by offering an automated, online application process. During this process, the applicant can link their business accounts, such as PayPal, eBay, or bank accounts, to give the lender access to real-time business data that allows them to make a more accurate loan decision. This application system allows the lender to look at each business as a whole, meaning that loan applications are not determined by credit score alone, but rather business history and incoming deposits.
Not only does fintech make it possible to apply for a loan in a matter of minutes, but lenders who use this technology can also provide faster application decisions. Fintech also allows for more flexible funding options once approved. Alternative online lenders are able to quickly fund business owners as soon as they have verified their bank account information. Funding options like revolving lines of credit make it possible for business owners to access their funds at any time.
Enhancing the Safety of Business Financing
Not only does fintech make it possible for businesses to obtain financing faster, but these alternative lenders have also worked to make the process safer. Each fintech company has their own privacy policy, which outlines the specific steps the company is taking to protect users’ personal information. Here are just a few ways that many fintech companies are making the funding process more secure:
- High-Level Data Encryption – Sensitive data that is used to determine an applicant’s loan options, like name, address, and social security number, are kept protected through data encryption. Before applying for a small business loan, be sure to check the company’s security measures. A TRUSTe Privacy Certification indicates that the company is taking comprehensive measures to protect personal data.
- Protected Login Credentials – Fintech lenders need access to your company’s marketplace accounts and payment processors in order to determine your eligibility for a small business loan. By redirecting you to the site to login and confirm that you own the account, the lender does not see, store, or have any access to your username or password. This helps keep your business accounts more secure.
- Customer Information Security – Many fintech companies keep customer information stored on their own secure data servers or third-party servers in secure U.S. data centers. These safeguards are in compliance with federal and state regulations which aim to keep sensitive information safe.
Fintech lenders help make business funding possible for small business owners who may not be able to obtain funding from traditional lenders. Through the use of innovative technologies, these alternative lenders make the business loan application and funding process easier and more secure, opening up great new opportunities for aspiring entrepreneurs.