Their plenty of advice about business loans online @ Oak Park but basically all the advice is similar: you have to have a mature business plan.
Because a loan is more than just money. He paves the way to realize a vision.
All facts about the guidebook “Credit for entrepreneurs” at a glance:
- There are several freelancers that have a direct influence on the amount of credit, terms and government grants.
- The eight components of a business plan should be considered during the preparation.
- The bank discussion decides on the lending, so a good preparation is necessary.
But what possibilities are behind the offers for loans for entrepreneurs? Our guide to the topic of credit for entrepreneurs reveals it!
- 1. Start request for an online business loan!!
- 2. The Business Plan: The first step into self-employment
- 3. The Bank Talk: Good preparation is everything
- 4. The conclusion: not every bank recognizes a good business idea
1. Start Request for an online
Self-employment is characterized roughly by the fact that one is not in a dependent employment relationship with someone or something. Self-employed have their own freedom of choice and can freely dispose of the work and operating material . In addition, you can employ employees and advertise at your own discretion. Furthermore, the management of working capital belongs to the independence, which is usually realized at the beginning of loans until the first revenue. A distinction must be made in detail between various self-employment activities, which can influence the volume of credit and the creditworthiness.
Four ways of starting a business
There is the possibility to start a company with one or more partners . In this way the responsibility is divided among different persons. Responsibility refers not only to the moral obligation towards the employees, but also to the economic obligation to the creditors. What the division of responsibilities looks like in detail varies from industry to industry and from company to company. Certainly here should the life wisdom: “Cobbler stay with your last!” Follow, so that each partner, if possible, raves in his field of expertise.
In this case, most lenders require collateral from the directors. In practice, it no longer matters whether the company is an OHG, a GbR or a GmbH. When managing lending, the directors are held responsible with their personal belongings as far as possible, even to avoid unnecessary risk through speculation.
Another way of starting up a business is to take over an existing business . This is not only possible for heirs within a family, but also for longtime employees or outsiders. The decisive advantage here is that a functioning customer base already exists. In good business lenders will be less reluctant to grant generous lending. Of course, here too, not only the books of the business, but also evidence of performance of the borrower are examined. This is to prevent, for example, a butcher takes over a functioning electric company and leads to bankruptcy.
A mix of the aforementioned models is the participation in a company . On the one hand there is the successful existence of a company and on the other hand the distribution of responsibility to several partners or business partners. Both can speed up the decision to buy a loan. The search for further parties can be based on a necessary increase in the operating capacities. Another reason may be the pending retirement of another party, which will slowly withdraw from the business. Again, this information is likely to arise in a loan application.
Another type of self-employment is the franchisee . He takes over an already existing and successfully established concept and moves into economic responsibility. In contrast to the freedom of choice defined above, the franchisee must adhere to certain requirements. However, he bears the financial responsibility all by himself.
The start-up can be done with one or more partners, meaning the takeover of a business, participation in a company or being a franchisee. The type decides on credit volumes, maturities and grants through public funds.
2. The Business Plan: The first step into self-employment
The A & O for lenders is the business concept. Here, the prospective borrower can prove that his business idea has been well thought out and all eventualities weighed. Say: He can show here that he is capable of acting responsibly and with foresight.
In general, the business plan should cover the following components:
The components of a business plan
The business idea must be well thought out and should withstand critical scrutiny . The debtor must be able to communicate to others what the added value for the consumer is. Old-established craft trades will have less trouble than creative and innovative business ideas.
In order to run a business or a company, the personal requirements must be right. It is important that on the one hand, the necessary knowledge for the implementation of the business idea are present and on the other hand, the necessary business knowledge to be able to take all necessary commercial measures. It must also disclose existing financial obligations in the form of alimony, loan repayment, etc.
The points market assessment and the competitive situation overlap in some areas. You should be able to get a picture of yourself and the lenders as to why the business idea could succeed. These include convincing arguments regarding the assessment of customers , as well as initial marketing plans to attract attention. The competitive situation is looking for competition in the market and whether the demand on the market is already covered. Thus, lenders will hardly provide financial resources if the fifth bakery branch is to be opened in a 100 meter area. Here is the talk of the proverbial market saturation.
Similarly, the business plan should include an accurate list of the machines, equipment, and materials needed to successfully launch. In case the start of work necessitates the recruitment of staff , their required qualifications must also be listed.
The location is, as shown by the bakery branch , of crucial importance. This does not necessarily affect the density of competing companies, but also the connection to the infrastructure or raw material supply. Here it is necessary to decide on a case-by-case basis which factors make up the ideal location.
The point future prospects deals with the realistic assessment of the borrower and the plan B in case of worst case of the occurrence. Here you can play through different scenarios that have nothing to do with black painting. The lender must be sure that the borrower is willing to repay the borrowed money.
The legal form decides on some tax and legal consequences . These are important to lenders because they need to properly assess borrowers. Therefore, in the case of partnerships in advance, it should be carefully considered which person has which tasks to fulfill.
It also demonstrates good preparation when future businesspeople have a clear picture of what approvals they need to start their operations, what insurance they can or must do, and what commercial space is needed to start operations.
3. The Bank Talk: Good preparation is everything
In the bank discussion, the business plan is presented in a verbalized form to the lender. Here it is to convince on the whole line. Surely there are some who are very insecure of the very idea of having to talk in front of other people. The idea may still be so good, the fear wins. In a first step, a consultation appointment must first be agreed with the bank. Here, appointments should be arranged with several banks. This allows comparisons between the loan offers. Also, it’s quite possible that the business idea does not appeal to every lender.
Once the business plan has been set up and all “ifs” and “buts” played through , it can help to practice the conversation in advance. A little bit of routine gives you a sense of security, which is especially important when trying to convince. During the conversation, the goal must be kept in mind . This is also trained by early practice. In case of uncertainties, one usually gets entangled easily and digresses from the topic. That should not happen in a bank conversation.
Very few debtors go into this appointment and are completely free of doubts. Of course you have to ask yourself with common sense if the business idea really is such an unbeatably good idea. But during the conversation, these doubts must not win. Public funding can only be requested if a credit application has already been submitted. If the borrower alludes to these grants, he already proves that he has been well informed and prepared, especially when making economic arguments such as interest savings.
Whatever the legal form, the lender will most likely insist on collateral . Since it makes sense to think in advance, what can serve as security and how many collateral should be retained in case of cases. After all, there is a certain risk of loss everywhere.
4. The conclusion: not every bank recognizes a good business idea
Business ideas are shaped by subjective feelings. Good preparation is basically necessary and brings the founders of the company a decisive step closer. In advance you should deal with all eventualities and develop solutions for it.
In addition, interpersonal perceptions play a major role. A bank adviser may be biased for a variety of reasons. His own life experiences play a role here as well as the pursuit of certain business practices dictated from above.
Also not to be underestimated is the most natural of all human selection principles: the “can not smell”. So incredible, but still true, this primal instinct can tip the scales. Straight credit agreements are based on trust. This is difficult if you do not like your counterpart.