When should you use an online lender for your small business?

If you’re looking for funding for your small business, it can be overwhelming given the number of options available. On the one hand, banks usually offer the best annual percentage rates (APRs), the largest loan amounts and the longest terms, but their loans are difficult to qualify for and can take a long time to fund. In this case, you may want to consider an online or alternative lender. Below, we’ve listed some other situations where you might want to opt for an online lender over a bank.

You need money quickly: While banks typically offer the most competitive terms, they can take weeks to months to approve and fund loan offers. If you need money within a few days, you may want to consider an online lender—some online lenders, like PayPal Working Capital, can provide funds to your account within minutes of loan approval.

You have a poor to fair credit score: If you don’t have a great credit score, your chances of getting money from a bank can be low. Some online lenders, like Kabbage, don’t require a minimum credit score, and will instead evaluate a business based on its financial and social media data. If you’re limited by your credit score, then an online lender may be your best bet at getting funds.

You need a smaller amount: Banks are less likely to approve loan amounts under a certain amount (frequently $1 million), as the cost of underwriting a loan is the same regardless of the loan amount. It therefore makes more sense for them to only approve larger loan amounts, but this can be frustrating for small business owners. Thankfully, online lenders have stepped in to fill this funding gap, with many offering loan amounts starting as low as $5,000 (some even offer loans as low as $300).

Your business has low annual revenue or is not yet profitable: To get a loan from a bank, your business usually needs to have a certain minimum annual revenue and must show profitability for the past two or more years. If your business doesn’t meet these requirements, you may not receive a loan from a bank. However, many online lenders have more lenient requirements than banks, frequently requiring lower annual revenues and no history of profitability.

Your business is less than 2 years old: If you own a new business, it can be tough to get funding, even from some online lenders. Banks usually want to see at least two years in business, and many online lenders want to see the same. However, there are a few online lenders that require a year or less in business to qualify for their financing products. One example is BlueVine, which provides invoice factoring services and only requires three months in business (in addition to other requirements).

You need a product that banks don’t offer: When a bank lends to a small business, it is usually through a traditional term loan or a line a credit. In addition to these products, online lenders offer products such as invoice factoring or merchant cash advances, that allow businesses to use unpaid invoices or credit card receivables to receive financing. If you need a different type of product besides a term loan or line of credit, then an online lender makes more sense for your business.

Though online and alternative lenders have higher APRs and shorter terms than banks, they fill specific small business funding needs. If you find your business in one or more the scenarios above, you should consider getting funding from an online lender. Otherwise, apply at your bank or credit union before turning to an alternative lender.

This story originally appeared on ValuePenguin.