It's not always easy as an entrepreneur to get a bank loan, especially in the early days. Maybe your business has just started to go something and you have some momentum but you just need an injection of funds to take your idea or business to the next level. Just how easy is it for companies to say yes to an entrepreneur and what do they offer?

About 40% of new start up capital is debt from banks, this is a good way for entrepreneurs to gain financial investment as they get to keep their business as whole by taking on debt. This is a contrast to other methods of investment where an entrepreneur might give away a percentage of their business but not take on debt. So banks give entrepreneurs a good option to keep full control of their business.

Because start ups and businesses in their early days are considered to be one of the highest risk loans for a bank to offer, they do not make it easy. Because a business owner is asking for a loan it is likely that they do not have the collateral to make them a safe investment. If  a business hasn't made a profit or even just a small one, it is not a very attractive option for banks as they will conclude that you are at risk of not being able to pay off the repayments.

To reduce their risk banks might ask for a co-signer who is willing to take on the responsibility of unpaid repayments or debt. This is often signed by a family member and is either a wealthy or trusting party.

Because new business don't have a credit history for the banks to consider, they must look at the individuals who own the business. This can result in a declined loan application due to one of the owner's negative credit score or one blemish on your record. Even a low credit rating can be detrimental to your chances.

For a lot of entrepreneurs, the latest venture is unlikely to be their first. If this is the case then there may be a history of bad luck or poorly made decisions that have landed them in financial trouble and thus affecting their credit rating. If this is the case it will be extremely difficult to get a loan for this individual.

Banks will also want to take a look at your business plan before deciding what they can do in terms of lending money. If your marketing strategy isn't strong enough it is not very likely that you will be approved for a loan. It is in the best interest of your business to create the best business plan you can, this way you give yourself the best chance of success regardless of whether you are approved for a loan or not.

Banks are more likely to approve a loan if you can explain how the funds will be repaid with a well assembled package and a clear overview of your business for the bank to act favourably. Banks are there as an option for entrepreneurs, and it is not the financial institutions fault if a start up seems to be too risky an investment because they have proven to be so on many occasions. The best thing to do is know your business and have a clear plan for where you are taking it, that way with a loan or without a loan, you are giving yourself the best possible chance for success.

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