Weak business development is the result not only of administration and regulatory policies in this area, but also of problematic access to borrowed funds. The fact is that even before the crisis, credit for the development of small
business was not among the priority banking products.
Key Lending Issues
The main problem of this relationship is the opaque structure of the enterprise. The primitive level of financial literacy of an entrepreneur is useless, and often risky, for banks. Even a stable financial company with transparent activities does not always succeed in taking out a loan for the development of small businesses. What can we say about the entrepreneur’s lack of ability to draw up an elementary financial and accounting report for the bank. The next problem is the small percentage of equity in the authorized capital of the enterprise. It is very difficult to get a loan for the development of small business, if only 5 - 15% of own finances are on the balance sheet of the company, and the rest are borrowed funds. Any mistake in managing a business can result in bankruptcy. For stable
The development of the company requires at least 30% of
its own funds invested
. In addition, for the bank to provide a loan for the development of small businesses, you will need to have a business plan that indicates all the stages of development of the enterprise. But in this case, the financial literacy of entrepreneurs leaves much to be desired.
How to get the
Before issuing a loan for the development of small business, Sberbank, VTB or another credit institution will require mandatory guarantees for its repayment. Repayment of the debt is carried out at the expense of the profit of the enterprise, without withdrawing money from the turnover. This means that the income received should be significantly higher than the interest rate, therefore, to obtain a loan you need
Realistically assess the capabilities of your business. In addition to high rates of income, the applicant must present collateral for the loan. As such security, banks accept collateral, which should be liquid and comparable with the requested amount. A prerequisite for issuing a loan is the presence of an insurance policy not only for collateral and profitable assets, but also for the life of the owner of the enterprise. A loan for the development of a small business will require the availability of guarantors from among business partners, legal or private individuals, as well as key business figures. Such support will show the reliability and good reputation of the applicant. In addition to the full package of documents, the bank may ask you to draw up an agreement on the right to write off the available funds if there are violations
of the loan conditions by the borrower. The next step in issuing a loan will be to check the reliability of the borrower. And only after that the security service makes a decision: either “yes” or “no”. There can be no third option. Confidential information is guided by what employees of the bank, announcing such a result, are. Moreover, the reasons for the refusal are never communicated to the client. This is the generally accepted work policy of all banks.