Do’s and don’ts when completing a small business loan application

Small businesses are the economic engine of the United States. As of 2019, there were 30.7 million registered throughout the U.S. and those small businesses employed 59.9 million people.

Because of the COVID-19 pandemic, the scene has drastically changed. America’s small businesses now face another reality. As of September 2020, nearly 100,000 businesses had closed permanently

Given the circumstances, some possibilities to keep your business afloat are to reach agreements and extensions with suppliers and to understand the new needs of the markets. Another noteworthy solution is to take advantage of the best small business loans.

When to use a business loan

This type of financing is designed to provide solutions to business owners for needs such as investments for growth, purchase of equipment, machinery, or technology, but also to face a crisis like the current one.

The main requirements when applying for a small business loan are generally:

• At least nine months of operation
• Sales of $30,000 per year or $2,500 per month
• Have an ITIN number
• FICO credit score over 550

Some advantages when applying for the best small business loans are:

• Fast processing (3 to 10 days)
• Freedom to use the funding
• Fixed rates
• Better future loans

Accessing the best small business loans is easier than you think. Here is a suggested list of do’s and don’ts when completing a small business loan application.

Do’s

• Do a thorough analysis of the different types of financing so that you can identify the one that best suits your needs.
• Know your credit score before you apply. You can check it for free at Experian.
• Organize your financial reports, from your accounting records and tax returns to your bank statements.
• Identify and analyze how you will use the loan. Make a budget to determine the exact amount of money that you will need.
• Ask, ask, and ask again. Be sure to solve all your doubts, so that if you are approved, you will know what you are dealing with. In the event you are not approved, you will already have clear requirements for a future application.

Don’ts

• Don’t make false representations to get approval. Financial institutions investigate thoroughly, and the truth always comes out.
• Don’t apply for the loan if you do not satisfy the requirements. Rejections are also reflected in your credit score.
• Don’t choose the first financial institution where you request information. Compare and find the best option, even if it takes longer.
• Don’t present documentation with errors or mismatched data.
• Don’t believe everything people tell you. Always seek information from multiple, credible sources and directly from financial institutions.

Good loan management is the key to access better financial products in the future. Remember that it is essential to pay on time, keep the loan objective clear, and always have certainty about your company’s income to meet the payments.

The best small business loans will help you ride out the negative impact of a crisis. In these complicated times, you must keep the expenses of your business in order, and above all, have a great deal of mental clarity to make the best decisions. 

Camino Financial is a family-owned, online financial company that offers simple and affordable loans to small businesses who find it difficult to borrow through a bank. It establishes long-term financial partnerships with borrowers, helping them build their credit and graduate to lower interest rates loans.