The more documents you provide when you apply, the more likely the loan will be approved. So prepare a franchise agreement or letter of cooperation, contracts with landlords and suppliers.
Among the necessary documents are:
passport;
TIN;
Certificate of Incorporation of LLC;
certificate of income;
business plan;
Documents for ownership of movable and immovable property.
Features of business lending
Small business is a tidbit for banking organizations: entrepreneurs are willing to pay high interest rates on loans because they lack working capital, for example, and have nowhere else to borrow.
However, the peculiarities of small business make cooperation with this client segment more risky in comparison with other types of credit.
If the bank thinks that the risks of the borrower are too high, they will refuse to give a credit.
Small business risks:
Short life cycle – many businesses close within the first year after registration.
Small income.
Lack of opportunity to adequately assess the financial situation of the organization. This is due to the lack of transparency of the simplified form of accounting.
Low liquidity or lack of property, which can be provided as a subject of pledge.
And another widespread phenomenon is the lack of start-up capital.
All of this requires banks to have stricter decision-making policies, and not every entrepreneur can get approval on an application.
What to do if the bank has refused a loan
You have used our recommendations and taken into account all the requirements, but the bank still rejected – what to do? The main thing is not to get discouraged! There are other possibilities to receive money for the opening and development of your own business.
Many large companies are willing to invest in promising small businesses, thus finding a source of additional profits. Mobilize your communication skills and go to the negotiations – perhaps it is your ideas that will interest a potential investor.
