You use a business loan or loan for an investment in resources with an economic life of more than one year. This may concern movable and immovable property. Examples of movable property: machines, company car. Real estate is a business premises, storage, land. With a business loan you can also refinance real estate.
Both a starting entrepreneur, an entrepreneur who buys a business, and a long-established entrepreneur who is growing and growing needs business credit. What steps do you have to take?
It starts with a thorough preparation. Make sure your administration is in perfect order. The approach to the application then differs per bank and also depends on your relationship with a bank. If you have been a customer for a long time and you purchase more products from the bank, the application process is often faster and you can submit the application online to a significant extent.
The bank wants to know:
- with whom he works
- what the loan is needed for and
- how the borrowed money will be earned back and repaid
What information do you need to provide as a minimum? Firstly, data that provides insight into the (financial) performance of your company. Think of:
- Profit and loss account and balance sheet for the past two years
- Income tax return / assessment last year
- A prognosis about the current and next year
Information about your investment is also required. When it comes to real estate, consider:
- Appraisal report or building agreement
- Rental or lease agreement
- Specification and capacity of machine
But more is needed for documents. Check with the bank of your choice which ones are necessary for you.
An extract from the Chamber of Commerce
Statutes, if your company is a BV
- Order portfolio
- Stock of finished product
- Inventory work in progress
- Debtor overview
- Business plan
Substantiation of credit application
In substantiating your credit application, you demonstrate with concrete figures that you can bear the interest and repay the loan. You show what you can pay off each month.
Figures that give a good impression of the buffer that the company has at its disposal: equity.
Insight into resources and assets: banks require collateral for corporate assets.
It is important that you have a good understanding of your own credit requirements.
- You must borrow the entire amount of the investment
- You can partly finance it yourself.
- Is there still financial room in the company or is everything optimally organized and organized.
- Calculate your credit requirement carefully: it does not make a good impression if you apply for less credit than necessary.
After an online application and (depending on the nature of the application) a personal interview, the bank assesses the application. You will receive a quote.
If you want to accept the offer, sign the offer. The requested credit becomes available. That does not mean that communication with the bank is now limited to the monthly interest and repayment. The bank will often ask if you want to keep it informed of developments. Thanks to this information, the bank will have early insight into a change in the risks and the bank can assess whether the agreed credit form fits in well with changing circumstances.
It is important to have all figures and documents properly prepared and to always be able to provide a good and quick answer to questions from the bank. Why?
- First, lending money is not just a matter of collateral, but also of trust. An excellent administration and application support that trust.
- Secondly: a first rejection does not increase the chance that an application will succeed, the next one, therefore. Keep in mind that a large number of applications for a business loan are rejected. In part, these rejections are justified and necessary. In part, the rejection will be based on a poor substantiation of an application for an investment that has everything to be profitable.
The banks are not the only possible providers of business credit. The number of alternatives has grown in recent years. More about this elsewhere on the site soon.