Loan to start a business: the truth as it is

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Many people dream of starting their own business. However, only a few succeed. Why is that? Among the most common reasons, experts note lack of motivation, self-doubt, inability to plan a business competently. But the most common reason is, oddly enough, the lack of money. Almost any business at the initial stage of development requires certain investments. But where to find free funds?

The safest option is to find a lender among your friends and relatives. But not everyone has such people. The second option remains - to go to the bank and get a loan to open a business there. But is everything so simple? Let's try to figure it out.

Why is it difficult to get a loan to start a business? After all, such problems practically do not arise when it comes to a loan for the purchase of real estate or, say, a car. The answer to this question is obvious: the bank cannot be sure that the funds will not be lost, and the project will pay for itself. As practice shows, many start-up entrepreneurs are simply not able to assess all possible risks. However,Recently, domestic banks are increasingly willing to cooperate with representatives of small and medium-sized businesses.

Who has a chance to get a loan to start a business? Statistics show that banks are most loyal to lending to light industry enterprises and furniture manufacturers. Service enterprises (bars, cafes, hairdressers, etc.) also got into the “honor list”. They are also favorable to road carriers. This is explained by the fact that they most often take a loan specifically for the purchase of a car, which, in case of failure, can become a pledge.

The purpose of the loan has a big influence on the decision. The situation is easiest with loans for the purchase of real estate (warehouses, offices, retail outlets). In second place after real estate is transport and production equipment, which can also act as collateral in the event of an emergency repayment. The most difficult thing is for those entrepreneurs who are looking for money to develop their business and replenish working capital. In this case, they usually have to mortgage previously acquired property.

But few people manage to get a loan to start a business. Before disbursing funds, the bank wants to make sure that the business is actually making a profit. That is, only entrepreneurs who have worked more than 3 months in the service sector and more than 6 months in production can count on receiving them.

However, not everyone has property that can be used as collateral. How to get a loan to start a businesswho do not have suitable real estate, equipment or transport? The presence of guarantors comes to the fore in such a situation. This role can be played by any natural person who is able to provide a certificate of income or confirmation of the availability of suitable property. If you are unable to repay the debt, these obligations will be assigned to your guarantor.

But the most important thing - remember that going to the bank and getting a loan to start a small business is worth it only if you are 100% sure of the success of your plan!