You are starting your business and need funds to finance this project. Naturally, you go to a financial organization to obtain a bank loan for business creation . Bankers are sometimes difficult to convince. How to put all the chances on your side? What are the other solutions if your financing request is rejected? Dougs enlightens you! Update on solutions and alternatives to loans for business creation .
Ready for business creation: what for?
Bank loan for business creation: how to put all the chances on your side
The steps to take to obtain a loan for business creation under good conditions
Consider other financing solutions for your business creation
Ready for business creation: what for?
Creating your business will generate costs. They are more or less important depending on the nature of your activity. Here we draw up the (real) list of all the costs associated with starting a business .
For most consultants, the costs incurred at the start of their activity can be quite limited: a computer, some office equipment, a few supplies, etc. While the creation of a physical store may require more substantial expenses: costs linked to premises, purchases of initial stocks, fittings, etc.
Very strong disparities therefore exist in the financing needs of different creative projects. It will then sometimes be more difficult to rely only on your personal savings to launch your business. Here is why you may need to apply for a bank loan.
Banks are, however, quite cautious about lending to young businesses . You must therefore take all necessary measures to convince them.
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Bank loan for business creation: how to put all the chances on your side
You are there: the appointment is set and your financial advisor may have already requested certain documents from you. Let’s see how to present your project in the best light.
Documents to provide to obtain a loan for business creation
First of all, the business plan is an essential element in obtaining a bank loan. In short, it shows the credibility of your project. Put yourself in your banker’s shoes! For him, lending money is an investment, he must therefore have good reasons to believe that he will obtain full reimbursement.
The absence of market research, forecast accounts or commercial strategy becomes prohibitive.
Emphasize the strong points and present a viable, reasonable and profitable project. Demonstrate a stable and balanced financial structure! Show that the request for the loan is only there to finance assets and not to compensate for failing cash flow.
To understand how a business plan is created, you can consult this article explaining the construction of a business plan .
Highlight and present your project from the best angle
We can only advise you to take particular care in preparing your interview with the financier to obtain a loan for business creation . You will need to introduce yourself and your project. It is essential that you leave a good impression and that you are convincing. Do not hesitate to practice in front of your loved ones, in order to perfect your speech.
Remember that more than the forecast , it is the people who are involved in the project who will be able to convince the banker to grant financing. You must demonstrate that you have studied all of this closely: you master your market (competitors, complementary and substitute products, etc.), you have a clear vision of its longer-term evolution. Ideally, you’re almost a step ahead of all of this, because you’re already looking ahead to “what’s next.”
Experience in your future field of activity or a related field or experience in business creation by one of the partners is a plus: you know the sector, its inherent risks, but also those of creation!
Above all, be pragmatic. Of course, you must convey your passion for the subject, but your interlocutor expects from you a solid argument, based on clear factual elements, not just a lyrical flight.
Documents drawn up by an accountant are also reassuring for the bank: an entrepreneurial professional takes responsibility for the data provided.
Have solid guarantees
Once the business plan has been presented, the bank will compare your contributions to the financing you are requesting. Obviously, the greater the amount of the contributions, the greater the chance of obtaining this loan. So don’t hesitate to call on your family or friends (love money) to increase this “starting bet”. It will reassure your banker and allow your investors to benefit from tax savings under certain conditions.
Discover all the financing options to start a business without money .
Generally the debt/equity ratio is between 30 to 50% depending on the estimated risk of the project. The contributions taken into consideration are based on the amount of the share capital and subject to blocking, your current account contributions . Blocking the current account will make it possible to assimilate these contributions to quasi-equity.
Secondly, the other determining element is constituted by the personal commitments of the creator. Indeed, the bank may ask you for personal guarantees or deposits. In rare cases, it is possible for the bank to guarantee itself on the business it is financing (for example in a pharmacy buyout), but generally it will find no interest in it. If the company files for bankruptcy without being able to repay its loan , the bank then turns to the natural person partner and to the personal property put up as security. We are then witnessing a questioning of the separation of professional and personal assets put forward in corporate practice.