Bank loans are still the number one option for businesses to get funding. However, it may prove difficult at times due to the prerequisite for obtaining the desired funds. This has made many companies look elsewhere to satisfy their financial needs. This article will explain why it’s better to seek financing alternatives when starting a business and for foreigners through ITIN loans.
Why is it Better to Obtain a Financing Alternative When Creating a Business?
Not everyone meets the requirements for obtaining loans the traditional way. But casting your nets on many glasses of water can fetch some results. If one option fails, the other can help you land the fund needed to run your business successfully. Before you opt for bank loans, you should consult other alternatives like:
- Personal credits/loans. This includes your savings, insurance, mortgage, etc. These loans may require extra funding from other sources to fulfill your budget.
- Family loans. Depending on the financial capacity of your family, this is one of the best ways to get initial capital for your startup. Your family may not need you to pay back; other times, they would. However, there are no strict prerequisites to obtain funding from your family.
- Grants. The US government regularly offers assistance to businesses, especially during tough seasons like the covid19 pandemic. You do not return grants, but the process may become overwhelming if you apply late.
- Crowdfunding. Another popular alternative of obtaining funding for your business. However, crowdfunding is popular among fintech startups and requires active community building and thought leadership participation.
- Business credits. Business credits apply to businesses that want to scale or expand. In this case, you can compare the company’s credit capacity or savings and the budget at hand.
- ITIN loans. ITIN loans are particular loans involving an Individual Taxpayer Identification Number (ITIN). Through this, foreigners can obtain funding for their businesses in the US.
- A venture capitalist or angel investor. These people may want to control your business in the long run. The good side of getting loans from them is they become actively involved in your business and provide advice that would profit the company.
How to Differentiate a Legal Company to Apply for a Loan
There are many legal companies to apply for loans. You can find many offline, but most are employing innovative digital solutions and leveraging the internet to compete in the space. We have online loan companies that grant instant loans with lesser requirements in the parallel universe.
Legal companies to apply for loans include registered banks, small business administration (SBA) loans, registered online loan companies, etc. A legal lending company should have a reference number and seal indicating that the security and exchange commission (SEC) or other regulatory bodies oversee them.
Financing Option for Foreigners Through ITIN Loan
As a foreigner with no social security number (SSN) or credits yet, getting loans traditionally may be a problem. But there is a solution. Many lending now exists online to help you fund your ideas into a full-fledged career or business. In that case, you will need an ITIN. Getting an ITIN shouldn’t be a problem. You just need to adhere to the rules guiding the application according to the Internal Revenue Services (IRS) and fill out the W7 form on their official website.
You can apply for loans as a foreigner from companies that approve of using the ITIN. We call these loans ITIN loans. Applying for ITIN is simple, and in a few steps, you have your loan handy.
- Register your company as a “doing business as” (DBA) company. The approval of your company as DBA varies from state to state. So ensure you’ve read the policies guiding doing business as a foreigner in the state you reside in or want to do business.
- Open a business bank account. This should not be a problem. Just provide the KYC documents, and you’re good to go.
- Locate a registered lending company online and apply using your ITIN.
Sometimes, you don’t need to look too far to get financing for your business. Now you’ve seen the alternatives to get what you need. Meanwhile, besides other financing alternatives listed above, ITIN loans are good options for foreigners looking to do business in the US. Interest rates apply to traditional loans with SSN. Ensure to read the terms and conditions of the lending company before using to avoid legal complications later.