ITIN loans are a convenient financing alternative for immigrants and other individuals who haven’t obtained a Social Security Number (SSN), as they allow them to secure funding for their needs in a way that wasn’t possible in the past.
Although banking regulations and traditional financial practices prevented institutions from offering this type of loan in the past, financial services firms have introduced ITIN loans as an innovative way to assist this previously unserved segment of the population.
In the following article, we will explore how ITIN loans work, what are their main benefits, and how they can be used in the United States.
How do ITIN loans work?
ITIN loans refer to financing instruments that can be obtained by individuals who lack a Social Security Number (SSN) but who have already been granted an Individual Taxpayer Identification Number (ITIN).
To apply for an ITIN loan, a W7 must be submitted to the Internal Revenue Service (IRS) along with other documents such as your driver’s license, and school records. Additionally, a tax return must be filed along with the ITIN application.
Once these documents have been reviewed and approved by the IRS, the agency will grant the person an ITIN and this process usually takes between four and six weeks.
Since people can still build up their credit score regardless of whether they have an SSN or not, lenders who provide ITIN loans analyze the candidates’ creditworthiness based on their payment history, along with other important elements like the person’s income and employment status to qualify the candidate.
The benefits and downsides of ITIN loans
ITIN loans have opened a door for a group of people who were previously shunned by the financial system as they allow immigrants to access borrowed funds to cover their financial needs.
ITIN loans can be used for a wide variety of purposes including paying for your immigration documents, covering a budget gap, or giving the deposit for a new apartment.
Additionally, ITIN loans can be used to fund a small business venture, as the business owner’s creditworthiness will back the loan instead of the business’ finances.
Whatever the purpose of the loan is, borrowers can enjoy the convenience of not having to wait until they are assigned with an SSN to obtain the money they need.
That said, certain minimum requirements still apply, as lenders usually demand a minimum number of years in business for the applicant’s firm along with a minimum amount of annual revenue shown via a bank statement or tax return – in the case of a small business ITIN loan.
Finally, the maximum amount that the lender will be willing to grant the applicant will probably be lower than that of a regular loan as well.
How can you apply and obtain an ITIN loan?
Financial technology companies like Camino Financial have expedited the process of applying for an ITIN loan by reducing the amount of paperwork involved, while also eliminating the need to visit a physical branch.
In this regard, the application process can be completed online in most cases, and the prospective borrower will be required to provide some basic personal and banking information along with a few documents.
The process can probably be finished in a matter of minutes and these firms typically take as little as 24 hours to evaluate the candidate’s eligibility and respond accordingly.
Make the most out of your ITIN
Although the financial system had provided little to no borrowing alternatives for individuals with no Social Security Number in the past, the wheels are turning in favor of immigrants with the introduction of ITIN loans.
These loans can be used either as a way to obtain funds for an immediate cash need or they can also be employed as a bridge loan that could be then exchanged for another loan with more advantageous conditions once the SSN is in.
If you are an immigrant in need of borrowed funds, an ITIN loan can be a convenient alternative for you. Have you considered them already? Do your own research and find the best option for you.