Anyone who believes that getting bank credit for a legal entity is an easy task can find out, in the worst possible way, that it is not so. It is so bureaucratic that many people mistakenly believe that banks are not interested in lending to small businesses. See http://labeurettenue.com for a summary
In fact, what happens is that financial institutions act with caution against the high probability of default. It is up to the company itself to try to prove that it is capable of honoring its commitments.
Thus, we will dissect throughout this article the main criteria used by banks at the time of approval. In short, we will also present the reader with a much less bureaucratic credit alternative. Are you interested? Check out!
- Personal Guarantees
- Handling of cash
- Business plan
- Company History
- Collective loans: an alternative to be considered
The chance of approving a loan solicited by a company is noticeably greater when we give out collateral . That is, when we include in the contract properties of the company, such as vehicles and real estate, that will respond for the debt in case of default.
The function of personal guarantees is basically the same as the real guarantees. The difference, in this case, is that instead of prosecuting the company with the intention to pawn the assets in the contract, the bank triggers people: the guarantors or guarantors, who become the responsible for the debt in case of default.
Handling of cash
The chance is great for the bank to request supporting documents of the company’s cash handling as a condition for releasing a loan or financing. The purpose here is to check if there is a possibility that the company will pay the debt.
The requirements are varied: some banks accept statements from bank transactions while others require documents signed by the company accountant, to better analyze the origin of each debt or credit.
Some financial institutions also require a copy of the company’s business plan. The goal is to have access to important information such as marketing strategies, product portfolio offered and the financial plan of the organization. This is another means used to evaluate the company’s ability to generate the necessary return for debt repayment.
This type of requirement has the purpose of avoiding credit approval for a company that is, for example, investing heavily in old-fashioned or obsolete products.
Imagine, for example, granting a millionaire loan to a company that wants to produce large-scale typewriters. Will the company be stagnant or generate results and pay its debts in a year?
The entrepreneur must add to the request those documents able to prove the history of transactions of the company, such as credit card bills duly paid, negative debit declarations issued by the public authority and also the “nothing is” issued by the credit restriction registers, since the application will hardly be approved if the company is denied.
Collective loans: an alternative to be considered
Finally, we could not, of course, speak of collective loans. It is a market that keeps growing and one reason for success is precisely the reduction in bureaucracy – not to mention the best rates in the market!
By registering on a platform like Nexoos , the company now has access to resources made available by investors interested in betting on credit for courageous small businesses that are looking for growth or just a breath to get through a difficult time.