Business plan and determining the reliability of business for obtaining credit

In business turnover the opening of business called start-up, and the provision of funding for such projects – a loan for a startup. In order to take credit for starting a business will have to make a reasonable business plan, the content of which can convince the lender in the prospects of your business and your ability to repay the loans on time for your small business. It is worth considering that lenders prefer to grant loans to small businesses subject to the availability of material support, for which, most often, includes real estate.

Government small business startup loans
Government small business startup loans

The situation is exacerbated by the small business that every undertaking, especially those related to the conquest of the market, is fraught with uncertainty and, therefore, credit institutions are reluctant to give loans to small businesses during its organization. Initially do not known whether it will be cost-effective, consumer demand, whether there are reliable partners, etc. That is why it needs a strong government support for entrepreneurs just opening their own business, who want to get a loan for a small business.

To date, on the credit – financial market has developed quite a favorable situation for those wishing to get a loan to start a business. The fact that competition among credit institutions with each passing day increases and they are increasingly turning their attention to a small business. Offering small business loans, lenders set low interest rates and create for this segment of the economy favorable credit conditions. This leads to the fact that from year to year in the loan portfolio of more and more banks include credit for small business. But such prevalence of this loan product does not indicate that for the budding entrepreneur is easy to take credit for business. This is due to the fact that, as a rule, banks prefer to lend to small businesses in the event that the company has existed on the market, at least three months. And what to do those who want to take credit for a startup?

Businessman who seeks to get a loan for starting a business is worth, first of all, pay attention to the immediate environment – family and friends. To receive small business loans from such sources is the most profitable, but also the most troublesome task. The benefit to get a loan for a small business from a relative or friend is undeniable – the interest rate, if it will, then, surely, is much smaller than in credit institution; if there is no ability to repay the loan for starting a business can come to a compromise with the least losses. But, at the same time, to find relatives or friends who can provide loans to small businesses, and to take from them the credit for start-up, more difficult and troublesome. Firstly, it will be difficult among the inner circle to find a person who can provide credit for small business at a level sufficient to finance it. And, secondly, you have a moral obligation to the person whom you must return the credit. Sometimes it is more difficult than financial compensation to the lender.

Another source, where you can try to get small business loans, you can call centers that specialize in supporting small businesses. Such organizations may receive a bank loan for a small business under its guarantees, and further distribute the total amount of credit among small businesses. These centers conduct their own review of the candidates who want to take credit for starting a business. It is very carefully studied presented business plans. The main criterion for selection is the rationale for the project’s profitability. These specialized centers make loans to small businesses often to begin the production process or the organization of trade or services. Taking credit for small businesses in the center should be ready to pay interest slightly higher than on bank loans.

Another kind of institutions that provide small business loans, are the banks. But to get a loan entrepreneur for a startup at a bank is least attractive option. It is connected not only with a high interest rate on such a loan, but with a fairly complex procedure that must pass an entrepreneur who wants to get a loan to start a small business. This is due to the fact that small business loans – the segment of lending that banks develop with the greatest caution. Although, of course, and the bank can take the credit for business. One of the highlights to get a bank loan for starting a business is the provision of guarantees for its return. Banks are reluctant to make loans to small businesses, if the business has not yet taken shape and has no fixed and current assets in an amount sufficient to repay the loan.

To get a loan for a small business entrepreneur may not have collateral. This is possible if it has the guarantee of a solid and profitable company that can, if necessary, to reimburse the funds. For the financial institution status of a guarantor, if we are talking about a loan for a small business, not only affects the decision to issue the funds, but also on the interest rates on loans.

The situation in the lending market is disappointing. Small business loans are welcomed by the state. But at the same time get a loan for a small business- it is quite troublesome and problematic that in a certain way inhibits the activity of business development in the country.

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