How to get a loan from a bank

If you don’t have enough money for business development or you don’t have enough money, go to the bank and apply for a loan. You will not be able to finance the project in full, but you can use the borrowed funds at the start.

Who is right for?

The loan is available to individuals as well as to current entrepreneurs and legal entities.

In the total absence of experience in business it will not be possible to get money to start a business in the bank. Each bank sets requirements for the minimum “experience” of doing business, as a rule, from 1 – 2 years and more. Therefore, you can apply to the bank as a private person and get a non-targeted cash loan.

The second option is to act in stages. Even with a minimum stock of own funds you can register a private entrepreneur or legal entity, make a business plan for development, start working with available resources, reach the break-even point and only then apply to the bank for a loan.

A year is just enough to test your strength in practice, to decide how much money you need for the business and what to invest in. It is better to apply for a loan with the experience you have already gained than to risk the borrowed funds at the start.

The chances of approving a loan for a young company or a start-up entrepreneur will increase the support of special structures that are engaged in business development in your region. Getting borrowed funds from a bank with their help is easier than applying for a loan on your own.

Such organizations are controlled by the state, they work within the framework of federal programs for entrepreneurship development. They do not issue money directly, but provide other financial support: they issue a surety, provide collateral and bank guarantees. With such collateral, it is easier to get funds from a bank.

To gain the support of the fund, it is necessary to prove the validity of your idea: to submit an application, submit a business plan with the calculations of current and projected values of financial indicators.

If you pass the commission check and get good, the bank will readily issue a loan for the required amount.

When it’s not worth trying.

If there is no money at all for starting a business and for current expenses during the first year of work, the bank will not give you a loan for IE and legal entities. Most credit programs require you to deposit some of your own funds into the project to get the rest from the bank. If you do not start something on your own, the bank will not believe in you and will not approve the amount requested.

You do not need to take a loan when it is clear that the business income will not be enough to service your obligations. If all the proceeds go to pay off the debt with interest, then the loan will be refused. The bank will not finance a project where there are high risks of non-repayment due to lack of available funds, lack of reserves, small profits and large expenses.

You will not be able to borrow money for small businesses in this way if your company is declared bankrupt, there are overdue loans, debts or fines. The bank will check the credit history of the company and its founders. Your personal credit history and reputation will influence the decision to grant a business loan. It is difficult to get borrowed money with a bad credit history and high debt burden.

If you already have obligations to banks, and also with delinquencies, it is almost impossible to take a new loan. First you have to solve the issue of current debts and only then go for a new deal.

The loan is not available for business from scratch: banks willingly finance experienced businessmen, so it is better to open a company with their own money, to work for a certain time, and then go for additional funds;

The chances of approving a bank loan are higher if you get a guarantee or other guarantees from a business support fund.

If you have a negative credit history and your company has minimal financial results, inadequate calculations in the business plan and no own funds, the loan will not be issued; If it is difficult to get a business loan, you can get a loan as an individual and the money will be used for business development.