Anyone who thinks about becoming self-employed with their business idea often faces the problem of financing. Often there is not enough equity available, which requires a loan for entrepreneurs. In most cases, founders know how much money they need. How they get these funds, however, is usually unclear to them.
Where to get a credit for entrepreneurs?
The first contact person is usually the house bank. She knows the applicant and knows how to estimate him.
No matter which financier the choice falls on, one thing always stays the same. Every lender refuses to take a big risk. Classic banks attach great importance to the business concept for credit for business start-ups. From a detailed and conclusive business plan, the bank can conclude whether the business idea promises a profit. A compelling business plan often results in banks also granting credit to people who are unemployed and have no equity capital.
The loan request must be well prepared, so that no further inquiries are necessary and the processing requires little time. The documents must be prepared in such a way that the bank can immediately recognize that servicing the loan installments will be reliable in the future.
What information does the bank need?
Of course, living conditions and income are of interest to the bank. The bank expects salary statements here. If the duration of the employment does not emerge from these, the bank wishes to see the employment contract. When it comes to start-up credit, it becomes difficult to prove it.
Banks often demand collateral. At low amounts, some banks are happy with the salary. At higher sums cars and real estate are considered as security. If such are not available, a guarantor is a good alternative. Even a residual debt insurance can, with higher sums, represent a security. If the claimant is unable to meet his obligations, the insurance is liable to pay.
Which types of credit are eligible?
Another criterion is the type of loan for entrepreneurs. Is it a Variodarlehen or a fixed-rate loan. With a fixed rate loan, the interest rate remains the same within a certain period of time. This remains constant, even if the market level changes. In the case of a loan with variable interest rates, the bank is guided by the current interest rate of the Bank. In low interest rates, it pays to conclude a fixed rate loan. If the interest rate is expected to decrease, a variable loan is more appropriate.
A Small loan is a good option if a sum of up to 25,000 euros is sufficient. Small loans are awarded by promotional banks located in each federal state.
5 tips for credit for entrepreneurs
1. Elaborated business plan
One of the key points to getting the loan you want is a well-designed and traceable business plan. After all, this is also the basis of the entire business idea. The lender wants to cover himself as extensively as possible against a possible default and can often explain in detail the business plan brought.
2. Use the loan amount economically
If the above point is fully worked out, this can be a decisive advantage. Many start-ups are initially very motivated and forge the biggest plans. However, only after a few weeks and months can a first conclusion be drawn on whether the investments made possible by the loan also made sense and bear fruit.
3. Smallcredit offers a good alternative
Since 2009 the Smallcredit fund exists in Germany.It is intended to help start-ups to start their professional lives with amounts ranging from 100 to 25,000 euros. At various institutes such a Small loan can be applied for.
4. Prepare documents well
Not only does this trust the lender, it also speeds up the process immensely. Depending on the lending institution, these may vary, but they usually differ only marginally. On the safe side the entrepreneur is definitely with the following documents, which should be completely worried in advance. A well-prepared business plan as described above, a list of financial resources and any existing assets.
Another advantage is a comprehensible investment plan with offers and cost estimates. Thus, the lender can see at a glance, how much should be managed with the capital. Are investments useful or hindering? Furthermore, a current (not older than 3 months) Credit bureau information should be presented. In order to establish the financial background of the founders, income tax assessments of the past 2 or 3 years should also be prepared.
Bank employees and lenders can often ask critical questions in the room that you should solve confidently. How is extreme situations dealt with? Is there a plan B? Can the concept persist in the long term even among competitors? Think in advance which questions could be asked and how would you like to answer them?