One of the most common questions future entrepreneurs ask themselves is where to get the money to start activities, equipment purchase, office refurbishment and finally: for goods. We advise where to get funds for all this.
When the perfect plan for conquering the market has come to mind, it comes to collide with brutal reality. If a person planning activities in a business is not eligible for help from the employment office to set up a company, all that remains is to choose a commercial route – a loan fund or a bank. Obtaining funds for starting a business this way is neither easy nor cheap.
The first visit to the bank can be disappointing
A brilliant business idea can be met with a rather cool reception from a credit analyst, for whom facts and figures matter. And these say that one out of 10 startups after one year of activity on the market.
In addition, the situation on the Polish market is unstable, more and more companies are collapsing and fewer and fewer are being created.
This further cools banks’ enthusiasm for lending to novice businessmen. How to convince the bank that this one of ten hopeful entrepreneurs is us?
Good credit history is essential
Good credit history will certainly be useful. The bank will also consider our previous income. Ideally, the company’s founder should work somewhere full time and receive regular and high earnings for a long time.
After that, the bank will have to assess the creditworthiness of the applicant, because the documents proving turnover and profitability the novice company simply does not have. However, there are few such people.
Despite this, there are plenty of offers for beginning entrepreneurs. Good Finance offer startup offers. However, it must be assumed in advance that without collateral and good credit history it will be difficult to get more than tens of thousands of dollars to start and on fairly difficult conditions when it comes to interest on the loan.
This may reach almost 20 percent per annum in some banks
Businessmen who have good security in the form of a mortgage have the best. Then the bank can offer up to several million dollars mortgage loans.
It is also much easier to obtain an investment loan than a revolving one. The latter is granted for a short time, usually for a year. Investment can be spread over a dozen years. Usually, however, the bank will be the owner of the purchased machines or programs until the loan is paid back.
Not only banks lend us money Fortunately, but a bank loan also is not the only way to finance a company at the beginning of its activity. It is worth looking for preferential loans, government programs, and EU assistance programs under which you can receive support.
Here, much depends on the business plan, as well as the place where the business was registered – some voivodships do not participate in them.
What can you borrow money for?
Loans are granted to start a business or create a job for the unemployed by persons who have received a loan to start a business. You can receive a maximum of USD 60,000 for 7 years, and the loan can be secured by the lender’s own promissory note and handed by two natural persons.