Loan: Every business needs capital at some point, either during its startup or growth stage. A common option among entrepreneurs when looking for financing is to resort to loans.


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7 things you should do before applying for a loan

  1. Request at least 3 quotes of what interest to acquire with the loan. This way, you get the best possible price. Many times we want to buy new equipment, when we can get used equipment from businesses that have recently closed. Check the classifieds and banks that have repossessed equipment.
  2. Find out about your credit and always ask about the annual interest rate of the loan you are requesting. In the vast majority of cases, the fewer requirements they ask for and the faster they disburse it, the higher the interest rate. Educate yourself about fees.
  3. Check the “status” of your student loan. If your student loan is in arrears and you have not formalized a payment plan.
  4. Check the possibility of starting your business from your home, where your initial expenses will be lower.
  5. Educate yourself at the business level. We offer a free Business Practice Academy in which we prepare you in 6 weeks to start your business.
  6. Seek help to prepare a good Business Plan or sign up for a workshop to learn how to prepare it.
  7. If you are sold a business, be sure to request a professional appraisal before offering any money. Businesses that are in the process of closing or closed have no value. Request financial information, inspect the equipment sold to you and assess the viability of the business.
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11 things that financial institutions ask you when you apply for a loan

  1. For new businesses, a Business Plan with 3-year financial projections. For established businesses, a paragraph describing the business and a competitive analysis.
  2. Personal financial statement of each owner who has a 20% or more profit share of the business or complete a personal financial situation questionnaire that we provide.
  3. Personal and/or business returns for the past two years.
  4. Financing Request Completed.
  5. Business Lease Agreement (if applicable)
  6. If it is an existing business, financial statements for the past two years or for the time it has been in operation.
  7. Resume of the owner or owners of the business
  8. Most recent water, electricity or telephone bill with the applicant’s residence address.
  9. Quotes for equipment or machinery, construction or improvements depending on the purpose of the loan.
  10. Bank account statements for the last three months.
  11. Detail of accounts payable and accounts receivable if it is an existing business.

What to do and what not to do when applying for a loan for your business
To do:

  • Submit all the documents we request.
  • Deliver your documents clean and organized.
  • Be responsive to information requests from our officers.
  • Demonstrate security and confidence in your business.
  • If you had any situation in your credit, submit an explanatory letter.

What not to do:

  • Lying on the loan application.
  • Exaggerate projections to qualify.
  • Refuse to offer collateral when it may be available. This means that you do not believe in your business.
  • Undue pressure on the officers who are working on your application.
  • Requesting more money than is necessary for the business.
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5 things you should know about business loans

  1. Financial institutions request your personal credit history and that of your spouse (unless you have married capitulations)
  2. The higher the amount you request, the higher the collateral requirement.
  3. The fact of applying as a Corporation does not mean that only it is responsible to pay the loan. Commercial loans mostly require the personal and unlimited guarantee of the applicants.
  4. If you have any situation in the business that prevents you from meeting your loan proceeds, communicate it immediately. Situations on time, have a solution.
  5. If your need is to finance operational expenses, the ideal is a line of credit and not a long-term loan.

Warning Signs of an Advance Fee Loan Scam

Here are some signs of a possible advance fee loan scam:

Loan Scam

  • Scammers post ads that say you can get credit regardless of your credit history. They may say things such as, “Do you have credit problems? No problem.” “No problem – guaranteed,” or “We don’t care about your past. You deserve a loan!” Banks and other legitimate lenders will not promise or guarantee a loan or credit before you apply. They will first review your credit report and confirm your application information, and before making you a firm offer of credit, they will consider whether you are able to repay the loan.
  • Scammers do not disclose charges before you apply for a loan. Fraudulent lenders may say that you have been approved for a loan. But then, they tell you that you have to pay before you can get the money. It is a scam. Any up-front fee the lender wants to charge you before giving you the loan is a clue to walk away, especially if they tell you it’s an “insurance,” “processing,” or just “paperwork” fee.
  • Scammers call to offer loans or other types of credit. But it’s illegal for telemarketers to promise you a loan or other type of credit and ask you to pay a fee before giving you the loan. This is how the Telemarketing Sales Rule establishes it.

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