How to get a loan to entrepreneurs for business development

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To organize your own business or expand an existing one, financial investments are needed. What to do if there is not enough own funds? For most entrepreneurs, the answer is obvious – go to the bank and get a loan for business development on certain conditions. Is it so easy to take a loan to the borrower, is there a real alternative to bank loans and what conditions must be met for the money to be received – more on this later.

Small business lending

Representatives of small businesses include small enterprises without a legal entity, the total income of which, together with assets for the past year, does not exceed 400 million rubles, and the number of workers is not more than 100 people. Individual entrepreneurs are another layer representing small business. To start their own business or its sustainable development, they do not always have enough working capital, so we have to find sources of financing.

If, even a dozen years ago, the unstable situation in the economy allowed only a few to obtain much-needed money, since investors were in no hurry to invest in small projects. Today, the picture has changed, and small businesses can rely not only on private investors and foreign funds, but also feel free to contact domestic banks and even the state.

Bank loans to small businesses

It is impossible to categorically declare that anyone can come to a banking institution and take a loan for business development. The first thing to do before applying for a loan is to draw up a competent business plan, based on the calculations of which the bankers will decide on the issue of funds. Moreover, the answer will not always be positive, you can get a refusal or the amount issued will be less than the declared.

The lender will not take risks by investing in a deliberately losing idea, since for him the main thing is to return the invested funds, and even in multiplied form. For the same reason, banks rarely offer investment loans, the essence of which is to invest money in business development. It’s easier for them to borrow money and get a margin from it..

State Small Business Lending Program

If things did not work out with a financial institution, it is possible to turn to the state and ask for money for your own business. True, it will have to be reconciled with the fact that the amount issued will be small – depending on the region, it can range from 50 thousand to 1 million rubles. The interest rate on such microfinance loans is 10-12%, although they are issued for a shorter period, which, as a rule, does not exceed one year. The entrepreneur will have to provide a guarantee or pledge of property, the implementation of which will help cover the debt.

Man and woman at office work with documents

How to get a loan to start a small business from scratch

According to available statistics, about 80% of small businesses cease to exist in the first year of their operation. This is not to say that they are all going bankrupt, because some of them are part of larger enterprises, joint-stock companies, and some of them themselves become medium-sized and then large-scale enterprises. In addition, many SPs use the so-called “gray scheme” of income generation, therefore, banking institutions cannot see the real income of the enterprise, which could significantly increase the chances of obtaining a loan.

It is not difficult to get a loan for the development of your own business at the bank, however, for a positive answer it will be necessary to fulfill a number of conditions, since it is very important for a financial institution to obtain a guarantee of the return of borrowed funds. Do not forget about the opportunity to start a business according to the franchising scheme. In this case, it will be easier to get a loan to purchase a franchise..

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Borrower Requirements

The borrower must meet a number of requirements. Since the business is only planned to be developed, it will not be possible to provide any evidence of its competitiveness and profitability. For this reason, the bank will check the future small business entity as an individual in order to understand how responsible it is for people to take on obligations. Bankers will check the borrower’s credit history and send requests to the Insurance Fund and the FIU. If the person was previously an employee, they can make a request to the company where he worked.

Business requirements

As such, banks do not present requirements for a new project. They are directly interested in the business plan, therefore, its development must be approached very seriously. If there are no skills, it is recommended to attract specially trained people or a company that, taking into account all the wishes of the client, will draw up a document. An entrepreneur can easily find and buy a ready-made version of the plan, which spells out all the features of doing business in a single region. If you plan to carry out licensing activities, such as selling alcohol, you must present a license.

How to get a business development loan for entrepreneurs

For businessmen who want to get money to expand their own business, to some extent easier. This is due to the fact that they can documentarily confirm the existence of profits and even provide a pledge in the form of their own property. For the bank, this is one of the main components, and the businessman will bring additional bonuses in favor of a positive outcome of the situation. However, such a result is possible only if the client has the reliability, and complies with all the conditions of business:

  • pays wages;
  • provides contributions to the Federal Tax Service (use the service to generate reports to the Federal Tax Service online);
  • timely pays all taxes and fees; has a profit, etc..

Check out the service for calculating taxes on the simplified tax system and the formation of payment documents.

Dollar bills in hand

For what purposes can I take a loan for small business development

As previously reported, the bank is not so important what the borrower is going to do. It is more important for him whether he will make a profit to cover the debt. If the business is firmly on its feet and the entrepreneur plans to expand it, you can apply for finances for the purchase of equipment, vehicles, equipment and even real estate (factoring, leasing, commercial mortgages, etc.). If you need to increase the number of working capital, then you can also safely apply for a working loan to develop a small business or take an overdraft.

Unsecured

In the practice of Russian banks, there are loans that give an entrepreneur the opportunity to receive funds without providing collateral. However, it is worth saying that such loans are issued extremely rarely, since a banking institution needs a certain guarantee. For this reason, to minimize own risks, the interest rate on unsecured loans for business development is higher than standard offers.

Secured

The provision of collateral increases the chances of an entrepreneur to get a loan. Collateral may be movable and immovable property, surety of individuals or legal entities, the presence of a deposit in this bank, etc. In this case, the bankers are more willing to make a deal with the entrepreneur, since the sale of collateral in case of non-repayment of the debt will be able to cover the resulting debt.

Which banks give loans to small businesses

A loan for business development can be obtained from many banks in Russia. The proposals are made by both the major players in the banking market (Unicreditbank, Raiffeisenbank, etc.) and its smaller representatives (OTP-Bank, Rosenergobank, etc.). The table reflects the five largest players:

Bank

Banking product

Amount, rubles

Duration, months

Interest rate

Sberbank

Confidence

100,000-3000000

36

16.5-18.5

Express overdraft

50000-2000000

12

15,5

Turnover

from 150,000

36

from 11.8

Invest

from 150,000

120

from 11.8

Russian Agricultural Bank

Secured by the acquisition of commercial real estate

up to 200000000

96

individually

Secured by acquired machinery and / or equipment

up to 85% of the cost of purchased machinery / equipment

84

individually

State support of small and medium enterprises

5,000,000-1,000,000,000

36

10.6

VTB 24

Businessman

500,000-5,000,000

60

14–19

Current credit

from 850,000

up to 36

from 11.8

Investment loan

from 850,000

until 6

from 11.8

Alfa Bank

For any business purpose without collateral

up to 6,000,000

13–36

from 12.5

Overdraft

up to 10,000,000

12

from 15

Cars and special equipment leasing

up to 40,000,000

48

individual

Moscow credit bank

For small and medium businesses on bail

from 3,000,000

up to 60

individual

For small and medium warranty

from 500000

up to 36

individual

How to get a small business loan in a bank

Before you go to the bank with a request to provide a loan for the development of small business, you should carefully study all available offers, get advice from colleagues who have already taken a loan for business development. In some cases, when it is not possible to provide a pledge or surety, it may be more profitable to take a consumer loan in cash and direct this money to your own business, because interest rates on such loans can be significantly lower.

Man and woman with money in their hands

What documents are required for registration

If a bank is selected, you need to collect a certain package of documents. Depending on the institution and the purpose of the business development loan, it can vary significantly. Bankers are required to require a citizen’s passport and paper evidence of registration of the case. You will have to fill out an application form, where you specify all the necessary information. In addition, you will have to attach a business plan, tax return, indicate the current account, if any. It is possible that at the stage of consideration it will be necessary to convey other documentation..

Learn about a useful online service for calculating taxes at the Federal Tax Service and generating payment documents.

State lending to small businesses

Recently, the state has shown interest in small businesses. Both in the capital and in the regions, you can become a member of special programs for which you can get start-up capital for the development of your own business. In 2019, a program was adopted to expand state participation in promoting entrepreneurship, reduce interest on loans depending on inflation and the refinancing rate (key rate) of the Central Bank.

Microloans

In the West, the microcredit process of small business by the state through financial institutions has been widely introduced. In Russia, this practice is very poorly developed, or rather, is in its infancy. The advantage of a microloan compared to a bank loan is a reduced interest rate and small requirements for the borrower. Cash issued up to 3 million for a period of one year to 5 years.

The state program applies to small businesses that have failed to borrow money. A distinctive feature of the loan is that money is issued strictly for a specific project, which is closely monitored by the state. It will not work to take out a loan for small business development and spend it in another direction – a check of the competent authorities can take place at any time.

Credit guarantee in an accredited bank

If a representative of a small business does not have the opportunity to provide a pledge, he can take advantage of the unique opportunity of state assistance and draw up a state guarantee in the Enterprise Support Fund. Its essence lies in the fact that the bank grants an entrepreneur a loan for business development under guarantees provided by the state. This service is not free, so the borrower will have to pay a certain percentage of the loan amount.

This opportunity can only be used by those entrepreneurs who are confidently on their feet and have a profit from running their own business. State guarantee is a popular and affordable service, therefore it is chosen even by those entrepreneurs who have something to offer as security, since the service is financially advantageous, because the borrower does not need to draw up a pledge and insurance of the mortgaged property for his own money.

Man shaking hands

Getting a business development subsidy

Entrepreneurs who belong to the category of business people whose business is successful and earns income have the right to know that they can count on receiving free aid from the state to develop their business. Subsidies are allocated to regional business funds, so the specific volume of injections is determined in each region separately, depending on the available budget. The maximum amount is limited to 10 million rubles. It may be spent at the discretion of the owner of the case: rental of industrial premises, creation of new jobs, etc..

Concessional lending to small businesses

Beginning entrepreneurs who have no debt to the state, are not on the verge of bankruptcy, make timely payments under existing agreements and pay off interest according to the schedule, have the right to count on a reduced annual interest rate or an extended period of using a loan under the soft loan program. A loan for business development is obtained through SMEs in the branches of partner banks, among which are:

  • Rebirth;
  • Genebank;
  • Interkommertsbank;
  • Loko-Bank;
  • Promsvyazbank;
  • Universal loan;
  • Uralsib.

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