Traditional loans, Commercial Loans or Fintech: Which is Better?

What are the main advantages of traditional banking and fintech as financing methods?

In recent years, traditional banking has lost part of its monopolisation. According to accountants in central London and innumerable experts in finance, financial companies specialised in technology, fintech, could gradually displace the traditional methods of banks.

If you are looking for financing for your company and you were planning to request a loan at the bank, we invite you to continue reading. We will analyse three of the methods that you could use so that you can choose the one that best suits you.

Traditional bank loans 

They are ideal for those who still distrust technology and prefer to do everything with a traditional line of credit. Many people flee from it because of the tediousness of the application process and the low probability of getting it. For the most part, the requirements are quite demanding, and it might be necessary to present a guarantor.

These are the advantages they offer:

  • They are long-lasting. The beneficiary has a long-term to make the repayments. In addition, the interest rates are low and fixed. This allows obtaining greater liquidity.
  • If your company meets the requirements, you perform all the legal procedures properly, and you have a good relationship with the bank, you can request a large loan. These are often used for a high-value investment, such as cars or homes.
  • You can opt for refinancing of previous debts.

Commercial loans 

They are focused on companies, so if you meet the requirements you should have no problem with their approval. Commercial loans are small, must be paid back in the short term and the fees tend to be variable.

In addition, they offer certain advantages:

  • They are much more direct than bank loans. The procedure is not that long, and the requirements are not so difficult to fulfill.
  • Although the flow of credit is not very broad, it is ideal for SMEs that need to finance small expenses, such as the purchase of computers, or to increase working capital.


Companies of this type take full advantage of technology to develop the products and services they offer their customers. There are now many fintech companies that have been responsible for benefiting especially SMEs.

And what could a fintech company do in terms of the financing your business needs? These are the main advantages:

  • Fintech companies are much more practical. You can save a lot of your time by avoiding all the extensive procedures, paperwork and factoring. Instead, you will go directly to the part that interests you: receiving the money.
  • Forget about going to the bank. You will be able to make all the necessary transactions from the comfort of your home.
  • Most fintechs are startups or medium-sized companies, so you’re probably more taken into account than if you go to a bank.
  • The types of financing offered are simple but extensive, so you can find exactly what you are looking for without much complication.
  • Some companies offer unsecured loans. The only requirements to opt for a loan is to be a legally constituted company, with a bank account, and with at least 6 months of operation.

But perhaps the most striking and important attribute of these companies is the use of technology as their greatest resource. You can make the request, the payment and the follow-up of the credit through your computer, and with some companies even through your cell phone.