Young entrepreneurs who want to start their own business are primarily faced with the problem of financial loans. In fact, obtaining a loan is not so simple. The most convenient option is to borrow money from relatives, but not everyone has the opportunity. In this case, you can’t do without bank services: in fact, in any financial institution you can get a loan for the development of small businesses from scratch. It is recommended to visit some of the most reliable banks with a good reputation and collect information on the conditions under which they provide loans.
Small business loans from scratch: how and where to get?
After choosing a bank, you can send documents to the branch. Large financial institutions almost always offer several types of loans with different conditions. These are standard programs with various additions - they have a similar essence. Employees may suggest you study the offers of partner banks. The next step will be to draw up a business plan taking into account the selected program, marketing steps and adjusting other issues.
Having collected all the required documents, you need to apply for cash. It is necessary to prepare money for the down payment: usually this is a third of the amount of the desired loan. If all the requirements are met, the bank will most likely meet its client.
It is worth noting that the percentage at which the bank can issue a loan is rather big. This is due to taking into account the risk of the institution, because it is much more than when issuing a loan in other directions. Due to the unstable economy of the country, banks with great care give loans for the development of small businesses from scratch. To increase your chances of a successful outcome, you need a competent and effective business plan.
Business plan
It should include a detailed description of the subject of the business and the actions of the entrepreneur, monitoring the sales market, the presence of competitors, as well as a clear payment schedule for the loan. It is very useful to supplement the document with accounting calculations - so specialists will be able to see from what means you plan to pay off the debt. The business plan should be as convincing as possible, and also supported by a description of the collateral: real estate or cash. The loan committee may regard the refusal to provide collateral as the borrower's uncertainty about the return of funds. In this case, obtaining a loan for the development of small businesses from scratch will be very difficult.
Additional factors
The bank will certainly require a document on the income of an individual. It is issued by the tax office. This certificate may significantly affect the amount of the established percentage. And it’s better to take care of getting the paper in advance, since its design will take some time. Such a certificate is, in principle, a perpetual document, but when considering a request for a large cash loan, the bank can set specific terms for issuing and indicate the period for which reporting is required.
The borrower will need a surety. It is important that he has no debts and
bad credit history. Significantly affect the decision in a positive way, the guarantor's presence of a stable business or other substantial income. The borrower must also not have outstanding payments. If a person has a bad credit reputation in another institution, the bank considering the loan application will surely find out about it. It does not bode well for you.
Registration of a permanent place of residence, the marital status of the borrower will have a positive effect on the decision to grant a loan, it is desirable that this is a marriage registered by law. Pluses are such characteristics: a suitable age, the presence of dependents, the absence of debts on housing payments.
Reasons for refusal
The Credit Committee may prohibit issuing loans for small business development from scratch if the business plan is weak, inconclusive, or very risky. In addition, you will not receive money if employees have doubts about the organizational capabilities in relation to the scope of the project. A key role is played by collateral, its absence or lack of liquidity, the absence of a guarantor or doubts about its impact. The inability to compete with companies of the same profile in which it is planned to start a business, and the lack of significant advantages also play a significant role.
Accusing the borrower of the inaccuracy of the data provided or concealment of facts that affect the solvency of a person - such violations can negate all efforts. In this situation, even a chic business plan will not save a person who has withheld important information from the bank.
Methods for obtaining funds
The decision to grant a loan is based on two methods. The first is the conclusions of credit experts and subjective analysis. The second is decision-making by the scoring system. This method works on the basis of mathematical calculations, summing up the results of groups of a certain classification.
Other features
Interest should be shown in banks that have already implemented and are using a new service aimed at obtaining finance without collateral and paperwork. The whole process takes about an hour. From the documents you need only a passport and a certificate of income from the company. The percentage is slightly higher than in the standard program, but you can get the required amount almost instantly.
If the bank refused to give loans for small business development from scratch, do not despair. Some businessmen in a fever rush to the black loan market. There, most likely, he will be provided with such a service, but at a higher percentage and a shorter period. If the delicate conversation fails about the options for a refund, you should not wait. This is a very dangerous event.
Possible solutions to the issue
There are more acceptable workarounds on how to quickly get a loan for small business development. For example, you can take a cash loan, his bank will give out with great pleasure, especially on the security of real estate. The main thing is to ensure that the agreement states that a person can spend these funds at his own discretion. Many novice entrepreneurs go to such a trick. A loan is made by an individual, but they spend money on their business project. In most cases, banks do not track every person. Yes, this option is incorrect, but, most importantly, that it works. If you pay the loan on time and do not tempt fate, the bank will not pay any attention to the purpose of the loan.
Alternatively, you can apply with your business plan to organizations specializing in supporting young entrepreneurs. If your project will be successful, they will help to solve the financial aspect or offer to adjust the plan, which is also effective. You can contact companies that are interested in such a project. And, perhaps, they will give you money for loans. To develop a small business from scratch, you can get funds in many ways. The main thing is not to give up. There are also government programs and contests. You can start well by joining the fight for a grant. A competent approach, perseverance and good arguments given in favor of your project will certainly give a result.
Help for novice businessmen
Already for an existing business that requires additional investment, there is an easy way to get development loans . In this case, microcredit will help small businesses. The term of such a loan is determined by the financial institution depending on the purpose. When you take money to invest in a product or in working capital, the period may be limited to two years. If a loan is issued for the purchase of premises, equipment or tools, the time limits extend to five years. Surety is not always required, but only by decision of the institution. A microcredit bank takes into account the specifics and stability of a business. The borrower will inevitably have to meet with a loan officer, who can become a financial consultant for the business.
For entrepreneurs engaged in agricultural activities, there are banks that specialize specifically in working with this sector. Here is where to get a
loan for the development of small business in the field of agriculture.
Such financial institutions are ready not only to provide credit, but also to help businesses during their current activities. Such specialized organizations take into account the specifics of agricultural work. In addition, the borrower is available preferential programs and
deferred payments, which is very convenient.
Conclusion
By choosing the right bank, you can significantly increase the company's income by overpaying a small amount of interest. A real salvation will be a loan to develop a small business from scratch. Everyone now knows how to get money to fulfill their dreams.