Running a business is not easy. In fact, it’s quite complicated. Everything can go as planned with your business but you may not anticipate a need for additional financing to buy new machinery, invest in opening a store, hire extra staff, renew computer equipment, launch a new product, etc. If those situations arise, you need to be ready to finance your growth investment. Otherwise, your business needs to wait until you save enough cash to invest. Time is money and luck is a function of your ability to seize business opportunities when they arise. Get ready today by learning how to get a business loan in four simple steps, and the requirements you need to meet to get approved.
4 Steps to Get a Business Loan
Step 1: Plan how you’re going to invest the money
Asking for a loan cannot be a hasty decision or taken without careful consideration. When signing the contract with a lender, you’re committed to fulfilling your new obligation. Before you contact a lender, answer the following questions:
A. How are you going to use the money?
B. How much money do you need?
C. What will be the return on investment (ROI)?
Let’s review them one by one.
A. How are you going to use the money?
You need to have a clear idea of how you’re going to invest the loan in your business. If you speak with a lender and can’t answer this simple question, they’re going to expect you’re going to use this money to go on vacation or for other personal reasons. Rather than worry a lender, clearly communicate how you’re going to use the cash so they can get excited about partnering with you.
B. How much money do you need?
Depending on how you’re going to use the funds, this can be easy or hard to calculate. It’s easy to calculate when you’re going to buy a tangible asset like equipment or inventory. It’s harder when you need the cash to finance your operations. In other words, when you need working capital. Make sure you request the right amount because asking for too much may result in a declined application and put unnecessary debt burden on your business. And, asking for too little may not allow you to fulfill your business objective. When in doubt, consult your accountant or schedule an appointment with a business advisor at Camino Financial.
C. What will be the ROI?
This last point is no less important than the two previous ones. You must consider the profit or net return you will derive from your investment. First, calculate the amount of money you expect to earn from the loan investment. After, calculate the cost of the loan (including the fees and interest) with a business loan calculator. If the benefit is higher than the cost of the loan, you’re earning a positive return on investment and you should consider taking the loan.
Learn here how to precisely calculate your ROI.
Step 2: Calculate how much you can afford to pay each month
The second step is calculating how much you can pay back every month. You should be conservative and realistic when calculating this amount. Do not fall into false optimism. Evaluate what payments you can make without a significant increase in sales to ensure you can make your payments if you don’t meet your growth goals.
Be aware that if you don’t pay on time, you will likely incur a late fee. Sadly, some business owners don’t calculate the monthly payment well and feel forced to ask for a new loan to cover the debt. Also, failure to pay dues on time can lead to the denial of future credits. Even if you are approved for a new loan, it will likely be more expensive or burdensome than the existing one.
To avoid financial pitfalls, we recommend you use the Business Loan Calculator to measure the monthly payments at different loan terms. Simply input:
- The amount you want to request
- The number of monthly installments you want for your credit; between 24 and 60
- The monthly interest rate
After entering these three figures, click “Calculate”. All the information you need will show up on the screen.
Step 3: Choose your lender
Choosing the right lender is extremely important. First, don’t confuse a lender with a broker. The risk of working with a broker is they may run your credit several times and significantly hurt your credit score. If you work with a lender, they only run your credit one time. In the case of Camino Financial, they only conduct a “soft pull” on your credit, which doesn’t impact your credit score. Although brokers provide optionality because they work with several lenders, they will charge you 3% to 15% fee of the loan amount.
Before applying for a loan with a lender, spend five minutes doing a little research on the company. Here are some questions you should answer with your research:
- What do online reviews say about the company?
- What are the minimum requirements to qualify for a loan?
- What documentation do they need to approve your application?
- Can they fund your loan in a time frame that meets your business needs?
- Will the application impact your credit score?
- What are the terms of their loans? Would these terms allow you to make money from the loan investment?
Step 4: Submit the loan application
You must understand that even if you fulfill all the requirements, it is possible you don’t get approved for a loan.
Once you start the application process, try to be responsive and complete it quickly. Commit yourself to a deadline to complete the process. Any delays in the process will postpone the time you receive the money and the opportunity cost of not getting the loan increases.
Are you ready to apply for a loan? Below you’ll find how to apply and obtain a business loan with Camino Financial in three simple steps.
How to Get a Business Loan with Camino Financial
Getting funds for your business is very easy with Camino Financial. You just have to meet the following requirements:
- Your company must be properly registered and have been operating for at least 9 months.
- Your business must earn at least $30,000 of annual income or $2,500 of monthly income.
- You must be current with no past due payments on any existing debt obligations.
If you meet all the requirements, you are ready to apply for a loan with Camino Financial by following these 3 steps:
Step 1: Submit an online application to receive pre-approved terms
Click HERE and complete a mobile-friendly loan application (it should take you between five and ten minutes). No documentation is required and submitting the application will not impact your credit score.
Step 2: Review loan terms and authorize the download of bank activity
Within one business day, you’ll receive a text with the pre-approved terms of your loan and be contacted by your assigned business loan specialist. After reviewing the terms, take one minute to securely authorize Camino Financial to download the last six months of bank account activity to verify your business income. Depending on your credit profile and loan terms, your business loan specialist may request additional documentation to verify your income.
Step 3: Sign loan contract and get funded
The credit department will take between 1 to 8 business days to review your loan application. Upon receiving final approval, sign the mobile-friendly loan contract you’ll receive via email. You’re done! You will receive the funds directly to your bank account within two business days.
In summary, you can get funded for a business loan within 1 to 10 business days with less than a single hour invested of your time. Sounds too good to be true? Read our reviews on Facebook and Success Stories.