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If you are determined to improve your business and have made the decision to help you with financing. A good tip to apply for an SME loan is to be prepared. Well before, you should know what they ask and how the whole process works so that you use time effectively and on your behalf.
Commonly financial institutions share very basic and important requirements with respect to a business. These are not only to verify that there is a valid registration before the law but also to evaluate how viable it can be to grant you money. That is to say, although the final decision of the offer made by the institutions depends in a certain way on your compliance with each one of them. In the end also the capacity of payment that your business generates and the level of debt that you have up to this moment are decisive.
Every institution that offers loans, be it a traditional bank or an online financial one, asks you to fill out an application in which you must share basic information such as your name, your SME’s and the reason why you are requesting the loan. Here it is good to mention that depending on the institution and the way they handle their services, this last requirement is taken into account in a different way. For some institutions it is only information without influencing the final decision, but for others, “what are you requesting the loan for” is a determining factor.
For example, some banks request the business plan of your SME to analyze the feasibility of borrowing money, but in addition to this they also request another plan in which details in detail and how you will use the amount that will be lent . This gives an indication that depending on whether the project will generate a beneficial change to your business, in terms of money, they will answer yes. Here, our recommendation is that you investigate more thoroughly if this is a requirement requested by the institution you wish to ask for, so that you can assemble those documents with time and conscience.
In addition to giving basic information such as your name, your business and your location to request an SME loan, you must provide records that support this information. As they are proofs of address, official identification and the RFC (Federal Register of Taxpayers) with which you issue invoices in your SME. The latter is to verify that you meet your obligations before the Tax Administration System and that there is also a legal record of your business before the Government.
If you still do not have an RFC and you are not registered with the SAT, we recommend that you think about formalizing your small or medium business. Any institution that offers loans and is reliable requires this to be able to validate that their transactions follow the legal statutes established by the country. In addition to not only provide you with the benefit of obtaining financing but you open up the opportunities to get larger clients, managing to boost your business towards a promising future.
Another requirement that banks or financial institutions have in common is that they present documents that support the financial status of your SME. For example, a traditional bank will ask for at least the last 12 statements of account, all your annual and partial returns and your credit bureau. A financial online will probably only ask for your password from the SAT to see the level of billing that your business has and will review your credit bureau, in order to make the process faster and easier.
As you can tell, you need to know how much your income business generates and how much your level of debt and expenses is. Well, that gives a real idea of the viability of borrowing money and being able to pay it. For example, your billing shows as the flow of money in your company, while the credit bureau shows your behavior with other loans and the debts you still have. Remember that it is not bad to belong to the bureau but to have a bad history; which you can improve by creating a payment plan to liquidate past due balances and manage to pay on time.
The process between each bank and financial institution also varies, and although it is simple, time is important. Well after applying for your credit, the time of analysis of all the information to arrive at a final offer is different. While with traditional banking you can get an answer until after 15 days a fintech gives it to you immediately. As you see, it is important to take into account when you need the money and to whom you ask.
After you have a final offer and decide to accept it, follow the legal formality. That is nothing more than signing the contract in which the amount, interest and time to settle is established. And once you sign it, it only remains to continue with your project and give the correct use to your financing.
Now that you know how to prepare for an SME loan, you can go ahead to get everything they ask and in the end the process is efficient and agile. As a last recommendation, we can tell you to investigate more thoroughly all the institutions that can offer financing, so that you can choose the best option for both your ability to pay and your business.