How to get a loan for business development

Your new business is gradually getting on its feet and starting to develop, the first incomes appear. But, oddly enough, these revenues are disproportionately small compared to those indicators that you laid down in the business plan. And you understand that working capital is required. Common situation? Probably, each novice entrepreneur was faced with the need to obtain a loan for the development of his business. How to do it right?

Instruction manual

1

Assess the need of your business for funds. Before applying for a loan from a bank, you need to know exactly how much and for how long you will need. In addition, determine the maximum interest rate that you can afford, as well as the type of collateral that the lender can provide if necessary.

2

Conduct a small marketing research and make a list of credit institutions that provide loans for business development in your area. Compare loan interest rates, minimum and maximum loan terms, required collateral. Carefully study the sample of the future agreement so that you do not subsequently experience unpleasant surprises when circumstances arise that you did not consider because of inattention.

3

Assess the potential likelihood that the bank will not refuse your loan. The paradox of Russian bank lending is that funds are allocated for the development of an already existing and stable income-generating enterprise with a life span of one to two years. For the bank will also matter the turnover of the accounts; if the turnover is low, your application may not even be considered.

4

Based on these requirements, from the very beginning of your business do not try to minimize business income in order to optimize tax deductions. Declare all income during the first and subsequent years so that the potential lender can objectively assess the real volume and success of your company.

5

If your company operates on a simplified taxation system, keep a clear and systematic record of both income and expenses. If you carelessly conduct the expenditure side, this may deprive you of the opportunity to lend, as the bank is required to know the whole picture of the situation in your company.

6

When requesting a certain amount, clearly make clear to the bank its purpose and maximum size. Blurry goals, no banks will lend. If for some reason the bank offers you to take a loan in excess of your actual need for borrowed funds, treat this offer as discreetly as possible. Focus on the planned performance of the business and do not get into debt for the amount that the business is not able to work out. By the way, banks are sympathetic to borrowers who adequately assess their needs for funds.

7

Having decided on all aspects of lending, collect a full package of required documents and submit an application to the bank.

How to get a loan for business development