It often happens that by opening their own business entrepreneurs face a number of financial difficulties, such as a lack of money for expansion, or buying equipment, salaries to employees, and may be the purchase of raw materials. Or an entrepreneur, possessing a great desire to start its business, has no starting capital.
Today we will tell about the loan on the business and when it needs to be issued.
Business credit Unlike consumer is issued only to organizations and only on business goals.
In a consumer loan situation, the bank does not matter where the cash funds will be spent.
With a business loan, everything is stricter: and the goals of the loan and a package of documents for registration. All spending on the borrowed funds must be confirmed by invalid or acts, or other types of confirmation of payment documents.
The first and most common goal is the starting attachments in a zero business, when the implementation of ideas and plans need money, which is currently missing. Also, the goals can be attributed to the existing business, for example, here we are talking about covering costs. Costs can be completely different, ranging from paying wages to employees, payment of goods in postoplates, and ending with the purchase of raw materials and equipment for production.
First, there are one-time and multiple loans, or credit lines. If in the first case everything is clear: the entrepreneur needs money, he turns to the bank for a certain amount, and further pays debt with interest. In the second case, in the conditions of a certain monetary limit, the entrepreneur has the right to blame the funds from the bank repeatedly for the extent of the time established by the time agreement.
Also, there are such offers from banks as Overdraft, leasing, factoring. In difficult words hide pretty simple for understanding things. For example, leasing is the rental of some equipment or vehicle for the enterprise, during this lease, the entrepreneur pays monthly payment, and then it has the possibility of redeeming this property.
Overdraft is the ability to write off the cash in more than there is at the moment at the moment. In case you do not return the money provided by the Bank in time, fines for delay will be accrued.
Factoring allows an entrepreneur engaged in selling any goods to get money for the goods sold earlier than buying them to account. This is relevant in cases where buy delays payment for redefined products.
To make a loan, the borrower is required to apply to one of the banks. As a rule, questionnaires on such loans include a large number of items concerning the organization, its profits, annual revenue, and so on. The documents of registration of a legal entity or IP are also requested. The accounting report documentation is important: information on the current accounts of the organization, the Declaration on VAT and Taxes.
As in any other loan, the bank looks at the income of the borrower. If the profit from the business is not high enough to pay a loan, the bank will refuse to design. Also inconsistent in the accounting documentation that the borrower provides may be the cause of refusal. The main thing is to prove the bank that you have no problems with solvency, and enough funds for the payment of a loan.
Bad credit reputation, maybe the reason for refusal. The bank does not want to risk a loan for organizations with a bad credit history. Therefore, before thinking about a loan with a bad credit history, try to improve it.
In conclusion, I would like to say that the lack of cash to continue doing business or its start is not a reason to stop their business. It is important to adequately assess your capabilities and further if you are confident in the future of your organization, you can contact the bank for a loan. It will help you to start or not stop your work activity.