The market puts at your disposal different types of loans since they can vary depending on the purpose for which you are going to allocate the money, your type of business, your client profile, the amount you request, the term… In fact, In, most cases, the conditions will be established individually after a feasibility study by the entity you go to, varying from case to case to better adapt to each situation.
To apply for one of these loans, you must go to an office of the financial institution you have chosen or do it online. Once you have made the request, the bank will carry out a study of the solvency of your company. The flow of payments, the level of indebtedness or the value of the assets of your business are the fundamental aspects that the entity will study and that will determine not only the granting or denial of the loan but also its conditions. For all these reasons, it is essential that you have a healthy balance sheet that encourages the bank to trust your business and provide you with financing.
Every mortgage will include interest rates because obviously the banks won’t lend money for free, and depending on the type of loan, the interest rate and conditions will be different; a good example is a loan for self employed which usually has a lower interest rate compared to other products, but in any case, it is one of the aspects that you should pay attention to when applying for a loan. And it is that the lower the better since the fees will be lower and your situation more comfortable.
How much money you can get will depend on the entity and the economic capacity of your company. Although the maximum average amount that can be accessed with a loan for SMEs is between $50,000 and $60,000. In any case, it is an approximate amount, since it will depend on your bank, your situation, your needs and the purpose that you are going to give to that money. And the thing is, in order to get a loan for SMEs or a self-employed loan, you must justify what you are going to use it for.
Regarding the return periods, they can reach up to 60 months, although these times can also vary. In addition, they usually offer grace periods, in which the payment of the loan is paralyzed and the repayment terms are much more flexible than in other types of loans. In this way, you choose the frequency of your installments.
Like other financial products, loans for SMEs and the self-employed, in addition to interest, can support other types of expenses that you need to take into account to find out their most approximate cost. For example, it may have an opening, study or early repayment commissions, which can make it significantly more expensive. Also check if it has linked products, such as contracting credit cards, accounts or insurance.
Depending on the financing you request and the profile of your company, your entity may require a guarantee. However, you can also find loans for SMEs and the self-employed in which you won’t need it.
The requirements to obtain financing for your business may vary depending on the type of loan you request, as well as the entity with which you carry out the operation. However, there are some basic conditions that your company must meet in order to access one of these loans.
The financial institution will need your company to have a minimum annual income to ensure that you have sufficient solvency to meet the loan installments. It is also possible that you will be asked for a historical document that certifies that you have obtained benefits during certain years.
It is common for entities to require your business to be already consolidated and at least 12 months old. Although there are also some loans for new companies that are intended to boost business growth.
Your business must not be registered in the list of pending and unpaid debts of the companies. If so, the only way for you to obtain financing is through home equity loans or to pay off the debt to get out of the file.
When studying the application for a loan, financial institutions usually ask SMEs and the self-employed for more documents in order to make sure that they will be able to repay the money within the agreed period. Usually, the documents that must be presented to apply for a loan are those that demonstrate the activity of the business, its legality and its income and benefits:
VAT return for the previous year and the current year
Income tax return
Bank statement
Updated balance of company billing
Proof of payment of the Corporation Tax
Original and copy of the DNI
Original and copy of the self-employment registration document
Copy of the income tax return for the last three years, with annual summaries of VAT or personal income tax or companies
Last Social Security payments
Documents that argue the age of the business
Proof of income
Proof of other debts that could be had
Business plan
In either case, the entity may ask you for more documentation if it deems it necessary in accordance with its analysis and risk policies.