Sean and Kenny Salas, founders of Camino Financial. Concept: Camino Financial microloans
By: rkapur
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Camino Financial Microloans Vs. Microloans from Traditional Lenders

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Camino Financial provides online business loans and microloans to small businesses. We use technology to give customers a seamless experience. Our clients are guaranteed a high level of service and the opportunity to grow their companies and take them to the next level with the funds from our loans. If you are looking for a business loan or a microloan for a smaller quantity, we can offer a quick turnaround, competitive interest rates, and expert advice on how to maximize the benefits of choosing us as your lender.

Microloans from Camino Financial offers another advantage, as well. Repay it promptly for nine months, and you could be entitled to another loan, this time at a reduced rate of interest.

Let’s understand what microloans are and where you can get one.

What is a Microloan?

As the name implies, it’s a loan for a small (micro) amount. What does that mean? The US Small Business Administration’s (SBA) Microloan Program provides loans up to $50,000 (while regular business loans can be for much higher quantities). Their average microloan size is $13,000.

However, each lender sets its own limit. Camino Financial microloans are available for sums up to $75,000.

Who is it for? There’s another thing that you must know about microloans. They are not intended for large, well-established businesses. In fact, these loans are best suited for startups (with Camino, you need to have been operating your business for just 9 months), enterprises owned by proprietors, and small firms. For these ventures, a relatively small amount of money can make a huge difference.

A microloan may allow the borrower to expand the current level of operations, enter a new geographical territory, or even give it the money that it needs to meet its day-to-day expenses. Business owners also use microloans for purchasing inventory or buying new equipment for their firms.

You should use the money exclusively for your business It’s important to remember this point. Don’t make the mistake of diverting the cash towards personal expenses. Lenders disallow this practice, and the loan’s terms and conditions forbid it. Remember that it is in your interest to use the cash from a microloan for your business. If you do this, it could help you to generate the funds to repay the loan. If you intend to use the funds for personal purposes, then consider a personal loan as a more suitable option.

How long will it take to get your loan application approved? The answer could vary. Traditional financial institutions that have paper-based approval procedures can take a long time. Online lenders are much faster. Camino Financial’s time from application to funding is between 2 and 4 days.

How much does it cost? Now, let’s come to the question of interest rates. Are microloans expensive? They can be costlier than some other small business loans. However, some forms of borrowing, like lines of credit, could carry a higher rate of interest.

Let’s take some specific examples. Which institutions provide microloans? What are their terms and conditions?

Top microloan lenders at a glance

Here are the terms and conditions offered by 5 microloan providers:

Kiva PayPal Working Capital LiftFund Accion Camino Financial
Microloan amount Up to $10,000 Limited to 35% of your annual PayPal sales. Maximum $200,000 Minimum $500 – high upper limit Minimum $500 – high upper limit $5,000- $75,000
APR 0% SEE NOTE 1 PayPal doesn’t charge interest. Instead, you need to pay a fee. See NOTE 2 Not stated Not stated 19% to 34%
Loan term
Up to 36 months It’s determined by your sales through PayPal. However, if your sales are inadequate, you will have to pay a certain percentage of the loan amount every 90 days. Not stated 0.5 years to 5 years 18 to 24 months
Requirements Your friends and family should be willing to lend to you You should be a seller on PayPal Average credit score 575, collateral required A credit score of 575+, personal guarantee required No minimum credit score, no collateral, and no SSN are required. $30,000 in annual sales required
How fast will I get the funds About 60 days Practically immediately At least 3 weeks Not stated Within 2 to 4 days of applying for a microloan
Fees No fees See NOTE 2 Not stated Not stated 6.99% of the microloan amount

NOTE 1 – KIVA: According to Kiva’s rules, the money for the loan is raised from the borrower’s friends and family. They can contribute as little as $25 each. When the targeted amount has been collected, the borrower receives the money. Repayment is made without interest. Consequently, lenders don’t earn a return on the funds they deploy through the platform.

NOTE 2  – PayPal Working Capital: The loan is provided based on your PayPal sales history, so it’s restricted to businesses that sell through this payments company. After you take a loan from the company, PayPal will deduct a percentage of your sales amount to get its money back. How does this work? Use this calculator to find out.

The fee that is charged instead of interest could vary. Consider an example where your yearly sales on PayPal are $100,000, and you borrow a sum of $10,000. If PayPal deducts 30% of each sale in repayment, your one-time fixed fee would be $449. Here’s a table providing the fixed fees at different repayment percentages.

Sample fee calculation for PayPal Working Capital loan

                          Source: PayPal

LiftFund

LiftFund’s website is not very informative. It doesn’t reveal the APR that is charged on their loans or the fees that you could have to pay.

Accion

Again, not much information is available on the website. Some details are taken from finder.com.

What makes Camino Financial Your Best Choice If You Want a Microloan?

When you are raising funds for your company, one of the most critical factors that you must consider is the extent to which you can trust the lender. Would you like to deal with a financial institution that doesn’t enjoy your complete confidence? Or would you borrow from a lender that you trust implicitly?

Camino Financial has been providing loans to entrepreneurs for over four years. When you borrow from us, we won’t treat you like just a client or a number. You’ll become a part of the Camino Financial Family.

Now, you may be thinking about what that means. How will you benefit when you are a Camino Financial family member? Here are some of the advantages that you will enjoy:

Our loan approval process is far more flexible than that of other financial institutions

Borrowers who interact with us for the first time are often surprised to learn that:

⇨ We have far fewer business loan requirements than other lenders. For example, traditional lenders usually require a loan applicant to have been in business for at least two years. With us, this period is significantly lower at 9 months.

⇨ We don’t require collateral. Our customers tell us that this is one of the most significant benefits of dealing with Camino Financial.

⇨ You don’t need a social security number to apply for a microloan or a business loan to Camino Financial. Your ITIN will serve us instead.

⇨ We use PLAID, which is a service provider that furnishes us with your bank data. You don’t have to bother with giving us your bank records. We get it automatically and in a completely safe manner. This makes the loan approval process faster and saves you some trouble, as well.

We’re transparent

We’ll tell you exactly how much you’ll have to pay in interest and other charges. This information will be conveyed to you before the loan is finalized. What this means is that you’ll have all the details that you need to make an informed decision.

We guarantee that there won’t be any unpleasant surprises in the form of charges that you weren’t told about or fees that were buried in the fine print of the contract.

Every Camino Financial borrower has the opportunity to learn how we calculate our loan interest. You can also use our business loan calculator to estimate how much your microloan will cost you over its term.

We’re fast

Our automated process flow ensures fast funding. It takes us only between 2 and 4 days in the case of microloans from the time of application to transferring the money to your bank account.

The bottom line

If your company requires cash for buying new equipment, purchasing inventory, or any other purpose related to your business, you can apply for a microloan or a small business loan today. The application process takes just a few minutes, it won’t affect your credit, and you’ll know immediately if you prequalify.

 

 

 

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