How to Take Business Loans for your Business in 2022?

How to Take Business Loans for your Business in 2022? - Daily Business Facts

Obtaining a bank loan for business creation is a financing option for start-up activities. In addition to a personal contribution, such a business loan can be used to pay for equipment or to meet cash flow needs.

In this article, we will take a look at how to take business loans for your business.

How to Take Business Loans for your Business in 2022? - Daily Business Facts

There are several types of business loans, including:

  • The classic bank credit ;
  • Leasing;
  • Factoring.

What are the Steps to Obtain a Business Loan?

Before launching your business, it is important to remember that it is important to get the right information and to choose the right loan to create your business. Hence look at all the steps about how to take business loans for your business.

1. Making a Business Plan

To convince a banking institution how to take business loans for the creation of a company, it is necessary to prepare a business plan. The

The main objective of this document is to demonstrate the viability and profitability of the project. As such, it must be neat, complete and accurate.

The entrepreneur must take the time to write it. The business plan includes different sections, including :

  • A general presentation of the project;
  • Identification of overall objectives;
  • The projected balance sheet;
  • The projected income statement.

To create a business plan, it is possible to take advice from professionals or to entrust this mission to specialists. This is the most important thing in how to take business loans.

2. Financing Plan

The financing plan is used to describe the various subsidies for the project. It is also used to evaluate its profitability over time. It is advisable to present an executive summary and clear forecast tables to the banker to facilitate the study of the file.

To evaluate the need for financing, it is important to avoid minimizing costs. Indeed, a fair evaluation of the expenses allows to ensure that the necessary funds are available for the start-up of the activities and to avoid cash flow problems.

3. Guarantees

Guarantees are imposed by the banks and condition the majority of the how to take business loans granted. They are put in place to cover the financial risks linked to the business loan granted and to guarantee its payment. The guarantees can be constituted by a personal guarantee or a mortgage. This is the most important thing in how to take business loans.

4. Soliciting Banks

To get the best conditions, it is preferable to study all the proposals and how to take business loans from several banks. Indeed, the terms and conditions and the rates charged vary from one establishment to another.

What are the Rules of the Loan to Start a Business?

The rules for business loans for startups have been simplified to allow project owners to access start-up financing.

General conditions of how to take business loans from a bank for business creation, the following general conditions must be met:

  • The company is in its creation phase;
  • She has not submitted an application for a bank loan with a term of more than 2 years;
  • Its financing program is limited to 45,000 euros.

Amount of the loan: The business loan provides financing of 2,000 to 7,000 euros. It is mainly used to meet intangible needs, such as those related to working capital. This is the most important thing in how to take business loans.

Loan Features

The business start-up loan is a personal loan that does not require collateral and must be repaid within 5 years of being taken out. It is associated with a bank loan of at least twice the amount.

What to Do if the Bank Loan is Rejected?

In case of rejection of the bank loan, the entrepreneur has several possibilities, namely:

  • Review your business plan;
  • Access to financing solutions.

Review your project

How to Take Business Loans for your Business in 2022? - Daily Business Facts

Revisiting your project allows you to rectify the points that contributed to the bank’s refusal. The bank must normally give reasons for its decision.

It is also an opportunity to improve the business plan, if necessary. This is the most important thing in how to take business loans.

Other Financing Solutions

Other financing solutions are available for project holders who have not been able to obtain a bank loan for business creation. Indeed, public and private organizations offer many alternatives.

Honorary loans

Honorary business loans are credits granted to encourage the creation of a company or the resumption of activities. Among their advantages are the zero interest rate and the personal guarantee not required. The amount granted can vary from 1 800 to 90 000 euros.

In addition, the loans of honor allow :

  • Have personal funds that can be used for a bank loan;
  • Increase the need for working capital.

Microcredit

Microcredit is financing granted by institutions specialized in microfinance to entrepreneurs who are unable to obtain a conventional bank loan because of their low income. The amounts granted are limited to 5,000 euros and benefit from a reduced interest rate. They are repayable over 2 years or less.

Participatory Financing

Participatory financing consists in calling upon various investors, in particular through crowdfunding sites. The contributions can take the form of an equity investment in the company, a loan, or even a donation.

This type of financing is suitable for entrepreneurs who do not wish to or cannot approach financial institutions. This option is also indicated to complete a business loan. Beyond the financing solution, it is also a way to build a community around the business project. This is the most important thing in how to take business loans.

Incubators

Incubators can help entrepreneurs find financing through their network. For example, they can facilitate access to the necessary business loan through seed funds. The grants awarded are likely to be different from one incubator to another and depend on the type of project.

Business Angels

Business angels are generally self-employed people or former executives who want to finance innovative companies. In addition to financial support, they can provide technical support to entrepreneurs thanks to their experience and skills. The financing is between 50 000 and

700,000 euros.

Investment Funds

Investment funds are made up of public or private entities that participate in the capital of companies as majority or minority shareholders.

Intercompany Loans

Business-to-business loans are financing provided by businesses. However, regarding how to take business loans, the law stipulates that it must not be their main activity. In addition, the duration of the business loan cannot exceed 2 years.

How to Take Business Loans for your Business in 2022? - Daily Business Facts

In addition, companies must provide proof of an economic relationship between the organizations.

Competition

Competitions (regional or national) organized for entrepreneurs are generally aimed at well-defined audiences such as women entrepreneurs. Most of the time, they concern specific sectors of activity such as agribusiness, digital or solidarity initiatives.

The competitions allow access to financing, but also contribute to promoting the companies to economic partners.

Is it Possible to Obtain a Loan Without How Much Do You Need to Start Your Own Business?

In some cases, it is possible how to take business loans without any contribution to the creation of a business. However, you will need to apply for funds from third party to reassure the banks. In this way, the entrepreneur will be able to start his activities in spite of the lack or absence of personal contribution.

The following are possible solutions:

  • Use crowdfunding with professionals or individuals;
  • Accessing love money: this solution consists of calling on family and friends to finance a business project;
  • Integrate partners in the project and create the company with two people for example.

Specialized institutions also offer guarantee funds to companies. These are aimed at project leaders who do not have the necessary financing to obtain a traditional bank loan.

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