How to Apply for a Loan Online

August 07, 2017

The internet allows you to shop for groceries, read the news, check in on your friends and manage your personal finances, all from the comfort of your home. However, while all the tasks on that list are relatively easy, if you’ve never applied for a loan online, you may be wondering what that process involves. Here’s a look at what you need to do to succeed:


The online marketplace contains a vast range of loans and lenders. You may apply for installment loans, credit cards, small business lines of credit and many other types of loans from banks, merchant lenders and fintech lenders. The choice depends on the type of loan you want, the funding speed you prefer, your personal credit score and several other factors.

With traditional bank loans, you can often start the application process online but may have to follow up in person. If the loan is for your business, you need a business plan that includes future earnings projections as well as information on your number of employees, industry trends and your personal credit worthiness. The whole process can take weeks to complete.

If you opt for a credit card, you can complete the entire process online and receive acceptance or rejection immediately. The creditor uses your personal credit score to determine approval, and if your application is approved, receiving the card can take a week or longer.

Finally, fintech companies offer an application process that is not centered around your credit score. Rather, these companies use data to create a picture of the overall health of your company. The approval process takes seconds, and funding often happens within a day. In most cases, the minimum requirements include being in business for at least a year and meeting a certain revenue threshold.


Once you’ve honed in on a lender or narrowed your options, it’s time to start comparing terms. The cost of a loan is measured in its interest and fees. If the loan charges interest, remember to look closely for fees such as origination fees, early repayment fees or late payment fees. Then, determine how much it is going to cost to borrow the money you need over a year’s period. Finally, compare that amount to the cost of other loans you are considering.

For example, imagine one lender charges 15 percent APR with a $100 origination fee and another lender charges a flat fee of $1,000. On a $10,000 loan, 15 percent interest equates to $1,500 over a year, and with the inclusion of the origination fee, the loan costs $1,600. In contrast, the same loan with a one-time $1,000 fee and no accruing interest costs less. Note this example is simplified and does not take into account taking more than a year to pay off the loan.



Before you open a bunch of tabs and start entering details to apply for a loan online, gather the information you need. If applying with a traditional lender or a credit card company, pull your credit report to check on your score and review it for accuracy. If you need to submit a business plan with the loan application, run it past a consultant to boost your chances of approval.

Conversely, if applying for a loan through an alternative lender, be prepared to share information from your online accounts. In most cases, you sign into your online accounts such as Square, PayPal, eBay, Amazon, Etsy, Xero and Intuit QuickBooks, and the lender uses the information from these accounts to create a snapshot of your credit worthiness, your business’s general health, your cash flow and your business performance.


Whether you apply for a single loan or multiple loans at the same time, you don’t have to accept the loan if you don’t want to. First, review the repayment terms closely and be honest with yourself about whether or not you can afford it.

Credit cards often require monthly minimum payments that are only a percentage or two of the balance. While this may be affordable, paying only the minimums can lock you into debt for decades. Conversely, installment loans and lines of credit often require more substantial monthly payments, and while these may be harder to pay, the larger payments ensure your business doesn’t stagnate in debt.

Finally, some merchant lenders allow you to repay loans using a percentage of your incoming credit card sales or revenues. This option is appealing to many small business owners as it pairs payments with revenue, but for others, it cuts too harshly into their available working capital. In addition to payment amounts and timing, also consider late fees and other costs when determining whether or not the loan works with your budget.


Once you’ve closely reviewed the options and selected the right one for you, it’s time to accept the loan and start spending. Ideally, whether you work with a lender who requires a business plan or not, you should have a plan for the funds. That keeps you in control and ensures you don’t overspend on a whim.

With online lending, you’re not on your own. Many online lenders offer online chat or phone support while you fill out the loan. Additionally, these lenders have designed their application processes to make them as straightforward as possible. Now that you understand the steps, it’s time to start looking for the right lender for your situation.

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