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The internet is changing everything, including how businesses approach financing. One of the biggest changes for business owners has been the rise of online lending platforms.
The main changes the digital age has brought have been ease of access and accessibility. Most traditional banks have also launched online services to streamline their services. However, digital lending platforms are playing a new role in business lending.
What Are Digital Lending Platforms
Digital lending platforms are online service providers that connect borrowers with lenders. A borrower can go on a lending platform and state their basic requirements, such as the loan sum, purpose, and repayment terms. Based on the borrower’s qualifications, they will be matched with lenders who are willing to lend them money.
One of the strongest benefits of digital lending platforms is their speed and diversity. When you look for a business loan on one of these platforms, you can choose between all the lenders who are willing to work with you. That means side-by-side comparisons so that you are empowered to make the most financially prudent decisions for your business.
How Digital Lending Platforms Work
Normally, you just need to visit a lending platform website to get started. From there, you select how much money you need and how long you need to pay it off. You leave basic contact information so they can reach out.
One: Application
You will be expected to first fill out an application listing your:
- Business financial information (revenues, sales, expenses).
- Loan amount and purpose.
- Bank statements.
Business lenders use this information to decide whether or not to lend you money and the rates they’re willing to offer.
What a digital lending platform does is connect one borrower to multiple lenders to provide more options and speed up the borrowing process. You can mange your applications in one place.
Two: Assessment
This step is normally largely automated. Business borrowers will pull your business credit score from a bureau. They will review the documents you sent to gain a complete picture of your risk profile.
Increasingly, online lenders use more complex/complete processes to assess borrowers. They may include factors like sentiment analysis, going over online reviews and social media activity.
Three: Decision
Based on your request and their assessment of your business, lenders will either reject your application or send you an offer. This process increasingly involves AI and machine learning. Computers can now swiftly assess businesses for their likelihood and willingness to repay, often helping the lender personalize their terms.
Four: Review the Offer(s)
You can then carefully review the offer and decide if the terms are good for your business. If you have an offer you like, you can agree to the terms and move forward with the loan.
Five: Dispersal
Digital lending platforms often disperse funds within 48 hours of your approval. In some cases, it’s even faster.
Once the funds have been dispersed to your account, the loan is active. That means the repayment process has begun, and the repayment process has begun.
As you pay off your interest and principal on time, your business credit score will increase in the same way as it would with any financial product. Timely and full repayments can qualify your business for future loans with better rates.
Loan Comparison in Scandinavia
Scandinavian countries have seen digital business loans become more common and accessible. Fintech startups have been expanding accessibility to small and medium enterprises (SMEs) during the last two decades.
Let’s briefly look at the regulatory landscapes and what you can expect when seeking business loans in these three countries.
Business Loans in Norway
Business loans are widely available in Norway. Many Norwegian-language loan platforms can instantly be translated to English with the built-in Google Translate extension. For example, this platform connects business owners with loans of up to KR 5,000,000.
All business loans in Norway including digital loans are regulated by the Financial Supervisory Authority of Norway (Finanstilsynet). You can always refer to them for the rules regarding business loan interest rates, and other factors, in Norway.
Business Loans in Sweden
Sweden has a large and thriving business loan ecosystem, supporting many of the country’s businesses of all sizes. You can get approval for a business loan of up to SEK 5,000,000 in less than 24 hours.
If you’re curious about the regulations surrounding any business loans in Sweden, you can refer to the Financial Supervisory Authority (Finansinspektionen). They also regulate personal loans in Sweden, which come with regulations to ensure fairness.
Business Loans in Denmark
Digital business loans have gained traction in Denmark, with businesses of all size having many options. Many digital lenders collaborate with international credit providers. Danish business loans are available in widely varying sums and repayment terms.
Financial products and markets in Denmark are regulated by the Danish Financial Supervisory Authority (Finanstilsynet).