How and where to get a loan to start a business

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Our today’s article is about small business lending, and more precisely, about where a small business can get start-up capital. Well, who does not dream of owning his own business? Thoughts periodically arise in the head of every second person about how great it would be to change their job to the boss’s chair.

But few people leave their jobs, preferring to leave everything as it is. And the reason is the lack of start-up capital, because small businesses are very reluctant to lend. So how to get a small business loan? In fact, there are several loan options. Let’s consider them.

Content of the article:

  • We borrow
  • Let’s go to the bank
  • lending centers
  • If credit is not given anywhere

We borrow

If you have relatives/acquaintances who own large sums of money, you can turn to them for help. It is possible and even necessary to agree on the percentage with which the borrowed funds will be returned.

Only, few people will find acquaintances who are ready to give a large sum on their word of mouth, or even on a receipt. But we are considering this option, because in this case the percentage will be the smallest that can be.

Let’s go to the bank

Many banks are now ready to give business credit on various terms and with different interest rates.

Even special programs are created which allow you to choose the most profitable option for each case.

True, you will have to collect a lot of documents:

  • passport
  • Business permit / license / patent
  • Extract from the EDR
  • Tax certificate
  • income statement
  • Business plan

There are banks that issue loans only against collateral. In this case, you will need:

  • Documents on the right of ownership (for real estate, vehicle, etc.)
  • A document on the consent of the spouses to transfer property as collateral

If the loan requires guarantors, they must be provided. It is possible that a business plan will not be needed.

But here it is worth considering that the fewer documents the organization requires from you, the higher the loan interest will be.

Thus, the bank insures itself against possible risks of non-return of funds. You will also need to fill out a questionnaire. The full list of documents will be provided by the bank employee who is in charge of processing the loan.little secret – it is much easier to get a loan, the purpose of which will not be specified. These are so-called consumer loans. If you manage to convince the bank of your solvency, provide a substantial pledge and guarantors, you can get a fairly large amount. If you have visited all the banks, but the loan has not been issued to you, do not despair. Banks are not the last instance ready to provide the required amount at interest.

Credit centers

As soon as various opportunities appeared, centers began to appear, which are happy to lend to this small business.

Naturally, they also created their own requirements, compliance with which will be the reason for issuing loans.

The documents to be provided are approximately the same as for the bank, but here special attention is paid to the business plan. It will be evaluated from all sides, paying special attention to profitability.

By the way, such centers always have specialists ready to help with a business plan. They will point out the shortcomings and tell how to fix them. Should I listen to their advice? Yes, because you are not the first to apply with a similar goal. And, of course, the market is studied and all the pitfalls are known.

Since the main profit of such organizations is receiving interest on loans, you should not expect modest rates. Yes, you will get the necessary starting capital, but you will have to pay a significant amount for its use.

Before answering this question, evaluate the profitability. Take a loan only when you are sure of success.

However, this also applies to those cases when you borrow money from friends or take a loan from a bank. Especially if you took out a loan against collateral or with guarantors. In the first case, you will get rid of the collateral, in the second, the guarantors will pay the loan.

If credit is not given anywhere

Perhaps you have already borrowed small amounts before and have a bad credit history, which is the reason for rejection in banks and loan centers. What shall I do?

Try not to apply for a loan, but for subsidies. They are issued by the state, no interest is charged, and does not require a return. Small business loans and subsidies have nothing in common, so it’s worth a try.

Details of all options can be found in the administration of your city or in the employment center of the population at the place of residence. And do not forget about the business plan: in this case, it plays a decisive role.

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Category: credit or bank

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