The introduction of advanced solutions, such as electronic signatures (e-signatures), has revolutionized how you can apply for and get a loan to fund your business operations. Gone are the days when you had to be physically available to sign a business loan application.
Starting a business is a major milestone for most people. However, you might not have enough capital to run your business operations in some cases. Lack of enough working capital can affect the growth of your business, leading to reduced competitive advantage.
For this reason, most businesses find themselves looking for loans to fund their production line. However, as a small business or medium-sized business owner, finding ways to raise funds can be cumbersome, especially when you're not equipped with the necessary know-how.
On the other hand, technological advancement has played a huge role in changing business loan applications. The introduction of advanced solutions, such as electronic signatures (e-signatures), has revolutionized how you can apply for and get a loan to fund your business operations.
Gone are the days when you had to be physically available to sign a business loan application. With e-signatures, you can sign the necessary loan application documents from the comfort of your office, saving you time and money. If you’re looking for a provider, you can consider vendors such as jSign or any other reputable companies in your locality.
Meanwhile, here is a quick rundown of all you need to know about business loans. You'll learn the importance of business loans and how e-signatures can accelerate your business loan approval and funding. Keep reading.
The Importance Of Business Loans
A business loan is a type of financing intended and supplied to firms by financial and non-financial institutions to fund their production line. The funding will cover company expenses, ensuring your operations are up and running.
Getting a business loan plays a huge role in improving your productivity. The following are the benefits of getting a loan to fund your business operations. They include:
Easier To Expand Operations
If you have a large customer base, it might be hard to meet their needs due to insufficient working capital. This may force some of your target markets to consider your rivals, reducing your revenue. On the other hand, borrowing a business loan ensures you have enough capital to expand your operations to meet the market demand.
A business loan will provide enough cash to purchase extra equipment, improving your production line. Purchasing equipment can leave a huge dent in your hard-earned savings. Thus, with a proper business plan, the approved loan will ensure you have sufficient money to purchase and maintain the necessary equipment, improving your profit margin.
Normalize Economic Cycles
In most cases, a period of economic growth is usually followed by a decline. A small or medium-sized business is mainly vulnerable during these declines. Getting a business loan ensures the business stays afloat during these rough times.
It’s important to remember that even if a business is doing well, it's not immune to such economic decline. Therefore, when developing your business strategy, it's crucial to consider such slow periods. Implementing these ideas will also increase the effectiveness of the techniques you’ve already devised.
In some cases, if you want to expand your business during an economic downturn, most financial institutions will be able to assist you. In addition, they’ll make it easier for businesses to apply for a loan by providing lower interest rates.
As a business, applying for a loan during such downturns and inflation will ensure you maintain your momentum and stability until the market recovers.
Improved Business Credit
Getting a loan may play a huge role in improving your business creditworthiness. However, as a business owner, you must pay your loan on time to enjoy this benefit.
Failure to make timely payments can affect your credit score and public image. Thus, in the future, it might be hard for you to secure a loan, or you might get one with high-interest rates, affecting your profit margin.
“An e-signature is a legally binding process to consent or approve the contents of documents when conducting transactions”
How E-signatures Help Speed Up Business Loan Applications
Technological advancements have led to the wide acceptance of electronic commerce (e-commerce). The wide acceptance of e-commerce has led to the increased need to cut down on physical papers and, most notably, the need to accelerate processes. There was an introduction of e-signature to achieve this, which has gained popularity over the last few years.
In simple terms, an electronic signature (e-signature) is a signature in electronic form. It allows the team members to agree to and sign the terms and conditions of a document, regardless of their location.
An e-signature is a legally binding process to consent or approve the contents of documents when conducting transactions. E-signatures can take several forms, including an individual's name typed out, a signature drawn on the screen of your smartphone or tablet, and more.
Meanwhile, there are a variety of e-signature service providers to choose from. Each of the vendors will have different rates and security architecture to maintain the integrity of your document. However, it's important to conduct enough background checks to gauge whether the vendor will meet your needs and expectations, giving you the value of your investment.
The following are ways e-signatures can help accelerate your business loan approval and funding:
1. Streamlines Internal Processes
People relied on pen and paper for many years when applying for a loan. A business owner was supposed to print, sign physically, and send the paper contracts and agreements for approval. This led to the wastage of a considerable amount of time and effort and increased your chances of making mistakes. Adopting e-signatures eliminates all the steps involved in the paperwork.
With e-signature, integrating a proper system will make it easier to fill out the necessary documents and sign them from one place. After sending the already signed digital documents to a financial institution, they might take less time to go through and approve your business loan.
Furthermore, an e-signature helps you save time from disarray. If an online loan application requires more than one signature, your workforce can easily sign and share the documents, regardless of their locations, thanks to cloud services.
Moreover, depending on the type of your e-signature system, you can incorporate features such as reminders and notifications. This is to ensure that the team members are always updated, improving the efficiency of your business loan applications.
However, despite simplifying loan application processes through e-signatures, choosing the right business loan is still a challenge for most people. The following are some factors you should consider when choosing your business loan:
- Identify Why You Need A Business Loan
Understanding why you need to apply for a loan will ensure you choose the right funding for your business. How will a loan help your business grow? Answering this question will help narrow down your options.
For instance, if you need to improve your cash flow, your preferred business loan should be a line of credit. Or, if you want to purchase new land to expand your business operations, you'll settle for a commercial real estate loan.
Conduct extensive research to identify why you need a business loan. Then, find out the available loan lenders in your locality, guaranteeing you get the best deal on the market.
- Examine The Interest Rates
Every lender has different rates, depending on the repayment terms. When applying for a business loan, considering the interest rates will save you from paying more money in the long run.
Before signing the documents electronically, it's important to take your time to go through the displayed terms and conditions to avoid getting a loan with higher interest rates.
- Get Expert Advice
As a newbie, it might be hard for you to get the ideal funding for your business. But don't worry, you can consult several experts who will help you choose the right business loan for your firm. On the other hand, choosing a reputable funding manager will ensure you have seamless experience when choosing and applying for a business loan.
Apart from funding managers, you can consult your network for advice. Friends in finance may help you cut through some financial jargon, ensuring you get the right business loan for your business.
In addition, you can also consult businesses that have already gotten funding. Ask them about their types of loans and experience. However, it's important to compare a wide array of options for products and lenders to ensure you choose the ideal loan to fund your production line.
- The Lenders Reputation
This is another factor you should consider when choosing a business loan. The lender's reputation may affect your experience when applying and utilizing the funding to improve your business operations. There are several red flags you should check out when applying for a business loan. They include:
- Hidden Costs
Some lenders may display ridiculously low-interest rates to lure you. However, they might be hiding some costs, and you might end up paying more money in the long run.
For this reason, it's important to conduct enough background checks to have a clear image of how much their financing option will cost your business in the long run.
- Lack Of Physical Address
This is another red flag you should look out for when applying for a business loan. If the lender doesn't have a physical address, it might be hard to locate them if you have an issue or an inquiry.
Aside from the physical address, ensure you check whether the lender has an online presence, such as a website or social media pages. This will make it easier for you to gauge their reputation.
2. Improved Security
E-signature utilizes advanced security measures such as cloud services and authentication methods to ensure only the authorized team members can sign the documents. This improves the integrity of your document, making it easier for banks and other financial institutions to approve your business loan quickly.
However, before implementing any electronic signing system, it's important to understand its security architecture. Visit more than one service provider to ensure you choose a secure e-signature system at an affordable price.
On the other hand, paper documents increase the chances of manipulation, theft, and other issues. Unauthorized personnel may access the physical document and forge the sign before applying for a business loan.
For instance, if the financial institution realizes there’s no authenticity to the submitted documents, they may delay the approval of your business funding. This will affect not only your productivity but also your public image, making it hard for you to secure future business loans.
3. Minimizes Transaction Time
The transaction length determines how long you'll have to wait before banks approve your loan. E-signatures make it easier for banks and financial institutions to approve more loans in less time, increasing efficiency.
Together with digital documents, e-signature simplifies back-office operations, reducing the amount of time needed to approve a business loan from days to hours. In addition, e-signature also reduces document tracking and archiving errors.
Meanwhile, banks and financial firms will take more time to go through the submitted documents with physical signatures. Thus, you may wait longer before having your business loan approved by the lender. So, if you’re getting a loan to settle an emergency, it might be too late when you get the funding, which could affect your business operations.
4. Regulatory Compliance
Financial institutions are turning to e-signature solutions to ensure regulatory compliance, hence faster business loan approval. It's now easier to access well-detailed audit information on signers, including the precise time and date for signing, authentication methods, application signs, and more.
On the other hand, an investor or a business expects the financial institution to handle their sensitive data with utmost importance, protecting them from falling into the wrong hands. In turn, every sector has different rules and regulations surrounding its operations, and financial institutions are no different.
Financial institutions and banks must abide by these regulations when approving and funding business operations. However, with traditional signing (wet signature), fraudsters and other people with ill-intention can easily access a physical document. This may affect your competitive advantage, leading to reduced sales and revenues.
5. Get Real-Time Status Updates
If you adopt an e-signature, it'll be easier to see where a document or contract is in the signing process. Using a wet signature, on the other hand, involves physical signing and transporting documents.
Significantly, an e-signature solution allows a business to track the process. This includes information such as who signed the contract and when, who still needs to sign, and the current state of your loan application. Furthermore, you can easily reach out to people who need to sign the document for loan approval through this.
“Adopting e-signature is one of the steps toward becoming eco-friendly. It reduces the need for paper and ink, reducing your carbon footprint”
Other Benefits of E-signature
Apart from accelerating business loan approval and funding, e-signature has other benefits, which include:
- Environmentally Friendly
More and more individuals have realized the need to conserve the environment in the modern era. For this reason, it's important to identify the policies that can help you become eco-friendly. For instance, wet signatures involve the use of paper and inks. This has a negative impact on the environment through deforestation and pollution.
Adopting e-signature is one of the steps toward becoming eco-friendly. It reduces the need for paper and ink, reducing your carbon footprint. Apart from conserving the environment, this plays a huge role in improving your public image.
When managing a business, one of the major goals is to provide high-quality products and services at a lower production cost. Adopting e-signatures will help you cut down on costs for paper, inks, printing, and moving the documents from one location to another.
Although adopting an e-signature may have a higher upfront cost, it might save you some cash in the long run.
- Centralized Document Storage
Thanks to some technological advancements, you can easily integrate your e-signature with a storage vault to enjoy the benefit of centralized document storage. Thus, it'll be easier to locate the needed document at the right time, improving the efficiency of your production line.
Gone are the days when you had to go through an entire document system when looking for a particular file or document. This didn't only waste your time but also might have affected the efficiency of your production line.
- Easy To Use
This is another benefit e-signature will bring to your business. Learning to use and utilize e-signature might be easy for most people.
However, it might be necessary to provide the training needed for your team members. Depending on your service provider, the training might be third-party, or you might be forced to incur extra charges to provide in-house training.
After learning how to use the e-signature, it'll be easy to sign your documents instantly, making it convenient for your business and clients. Also, it'll reflect on the importance you give to someone's time, improving your public image.
With that said, it's vital to choose an easy-to-use e-signature system. Choosing a complicated system might force your team members to stick with traditional signing methods, reducing the value of your investment.
As mentioned above, business loans play a huge role in improving your business operations. The introduction of e-signature has simplified and accelerated the process of business loan approval. Conduct extensive research to identify the ideal e-signature solution for your business.