Start-up loan – The loan for founders: How to get it
Building your own existence and being independent is the dream of many people. The dream is often based on a good business idea. But there is usually a lack of resources. Therefore a loan is required.
There are many types of credit, which is why you should apply for a business start-up loan. This is designed in such a way that it should contribute in the long term to support the established existence.
Certain conditions have to be met in order to be granted a loan. First, the sustainability of the future company must be shown. It is important to draw up a professional business plan and have it confirmed by a competent body.
The admission requirements
First, a look at who can apply for a business start-up loan. The question of what is funded is then clarified. This paragraph concludes with the payment of the business start-up loan.
Entrepreneurs who want to become self-employed can apply for this loan. An application for a business start-up loan is justified if you start a new company or take over an existing company and thus set up your own business.
With the business start-up loan, which is earmarked, the operating and office equipment can be financed. It also serves to finance property, plant and equipment, the warehouse and the operating resources. Tangible assets are later included in the fixed assets, while the operating resources are part of the ongoing costs.
If a loan is approved, the payment will not be made in full. As a rule, you can request the payment of part of the amount granted for purchases. The rest initially remains with the lender. If it is a larger sum, the entrepreneur must submit his bills to the bank and thus provide proof of how much of the money and for what purpose it was spent. In order to be able to make further investments, a further part or the remaining amount of the approved loan can be released and thus used.
The following documents, which are explained in more detail, must be submitted to apply for a business start-up loan: These are the business plan, the investment plan, the sales and profitability forecast for three years and a tabular CV. A liquidity plan for three years and an overview of existing collateral must be drawn up.
If it is a matter of taking over the business from the founder, the balance sheets of the last two years and a current BWA (business analysis) must be added to the documents.
The business plan
The business plan is the most extensive part that has to be worked out. This is made up of several parts. There are two categories. The first section documents the business idea and the prospects of success. The second part of such a plan consists only of figures from which the sustainability of the company can be seen. Once all the information has been gathered, this plan must be submitted to a suitable body (tax advisor or the Capital Lender) for review. You can only submit the business plan to the bank if this is confirmed from there.
- The business plan begins with the cover page. This contains information about what kind of company it will be, the accessibility of the future entrepreneur and the address. The table of contents should show how the order of the next sheets is.
- First, the reader should take a look at the founder profile. It must be stated whether it is a sole proprietorship. The business idea is presented below. It should provide extensive information that exactly this plan will be accepted by future customers at the planned location. The market assessment is divided into the environment, the target groups and the measures for your own activities.
- The assessment of the competitive situation follows. Competitor analysis and location analysis are essential. This enables the lender to assess whether there are already enough other providers in this area in the region and therefore it cannot be expected that the planned company can successfully establish itself.
- Finally, company management and personnel planning are presented.
The second part of the business plan includes the concrete numbers that are required to approve the start-up loan. It starts with the capital requirement planning. The sales and profitability forecast is to be set up for three years and requires a special confirmation from an expert body. Liquidity planning is another part of the business plan. The schedule concludes. This shows the period in which the plan will be implemented and the first surpluses (profits) can be expected.
Before starting the business start-up activities, it is imperative to wait for the loan approval. As a rule, the loan is not granted retrospectively. At the same time, it must be checked whether there are any other options for subsidies. One could think of the entry fee through the job center. But you have to know that there is no legal claim to it. The granting is at the discretion of the responsible case manager.
In the case of a business start-up, it is common for the borrower to have 15% equity of the loan amount applied for. This means your own financial resources. Part of the equity can be provided in the form of services (furnishing work, manual work).
Before the permit is issued, the lender checks the existing collateral. If no guarantor or collateral is available, they request life insurance. If approved, the policy remains with the bank as security. For the purpose of payment, the business founder has to open a business account. The credit is transferred to this and all business activities are carried out.
In the case of a business start-up loan, the documents are often passed on to a guarantee bank. This checks the documents again for their validity. If this bank (often Best Bank ) finds the project plausible and makes a loan commitment, the house bank usually agrees to grant the loan. However, it should be noted that the guarantee bank does not only charge a one-off fee. For the period for which it is available as a guarantor, an amount is payable annually to this bank. The business usually needs a certain lead time before it can be foreseen that it will bring a profit. This time must be taken into account when calculating the amount of the loan.
Loan amount and terms
The maximum loan amount is up to 100,000 USD. This amount differs between the various lenders. It is important to note that depending on the lender, a start-up loan incurs commitment fees.
Usually two repayment models are offered. A term of 10 years can be agreed. In this case, the first two years are redemption-free. If the term is 5 years, only the first year is redemption-free.
The interest is subject to the usual loan interest rates. They fall due on the last day of the month. They are calculated retrospectively. The conditions must be carefully checked when the loan agreement is concluded. If the start-up loan is granted by Best Bank in the form of an entry fee, the fees mentioned above are due annually to Best Bank within the term.
The start-up bank’s release from liability is 80%. It therefore only bears 20% of the risk if the business does not support itself and the entrepreneur cannot meet his payment obligations. There is also the possibility to apply for the loan in the form of an entry fee up to three years after starting the business. The exact conditions are to be requested individually from the bank at which the loan is applied for.
A consultation appointment in advance saves time and work. After knowing what is needed, you can do your preliminary work regarding the documents to be submitted. In this consultation, you will find out what was overlooked during the development and what additional requirements the selected bank has for a business start-up loan. In addition to the business idea, the key to applying for a business start-up loan is a professionally created business plan.