Reasons why we give up a company loan unnecessarily

Trade and credit have been inseparable for thousands of years. Information on first loans is not provided by financiers but … archaeologists. For example, they found credit documentation before our era! The interest rate on the loan, by today’s standards, seems to be quite attractive: less than 4%.

Although credit is such an age-old institution, many of us are strongly against credit refusal. Is it always right? Let’s look at a few reasons why entrepreneurs are giving up credit.

My business is too small to get a loan

My business is too small to get a loan

If your company has 20-30 thousand dollars of monthly sales and 4-5 thousand profits, then it is probably too small to get a half-million-dollar loan – but do you really need half a million? The credit needs of companies are usually proportional to their scale of business, so small businesses need small loans. If your profits and revenues are stable, then why should you have a problem repaying, for example, USD 50,000 in loans during the year?

However, it is hard to deny that for small entrepreneurs, applying for funding can sometimes be a torment. The problem, however, is usually not the size of the company as such or the creditworthiness, but rather the problems with showing creditworthiness.

Small enterprises or self-employed persons are a very diverse group – it is difficult to assess according to uniform criteria. In addition, they are people who live in eternal misery and are therefore reluctant to excessive formalities. And no wonder: if you are a salesman, purchaser, marketing specialist, and investment manager in one, it’s still hard to find time for papermaking.

This is one of the reasons why micro-entrepreneurs “bounce off the doors” of banks that like diagrams, indicators, strict procedures, and detailed documentation. Micro-entrepreneurs usually don’t have the time – or even the opportunity – to provide banks with the information they need to demonstrate their creditworthiness. And this very often is a real problem.

Fortunately, extensive documentation is not always needed. We would not like to have an intrusive promotion on this blog, but … let’s put it this way: at Good Finance we can assess creditworthiness without any formalities.

Taking out a loan will hurt my company’s reputation

Taking out a loan will hurt my company

This is a fairly common fear, but is it justified? Indeed, we know the expression “live on credit”, and hearing “borrowing money” can be associated with patching the household budget at the end of the month. However, credit should not be associated with financing whims or a last resort in financial trouble. It can also be – and even should be – a tool for business development.

When thinking about reputation in the context of credit, you should not succumb to stereotypes. Look at it this way: credit in many respects is the same transaction you make with your contractors. If you meet your commitments, your image will strengthen. If you are late in delivery or the goods you sell are of low quality, your reputation suffers.

Similarly with credit: delays in repayment negatively affect your perception of your company. In addition, this applies not only to the current creditor but also to potential future lenders who will learn about it from Credit Checker.

Fortunately, Credit Checker can very well prove your reliability, if only you pay the installments on time.

So what should you do to avoid getting into trouble and your loan is good?

It’s simple: approach the loan the way you approach business. Responsibly. Credit can be a great tool for business development, but – if the commitment is too high and your plans don’t burn out as well as it had assumed too optimistic scenario – it can also become a burden.

Therefore, when taking a loan for the purchase of goods, for example, draw up three sales scenarios: optimistic, neutral and pessimistic. If in the pessimistic variant your income still allows you to repay the loan, it is worth using it.

High loan costs

bank

“Credit is expensive” – ​​we can often hear as a reason for giving up this form of financing. And in many cases it really is. But … this does not necessarily mean that the loan is unprofitable! For an entrepreneur, it is not only the price of the loan that counts but also the income that you can generate thanks to it.

Let’s take a simple example: you have the opportunity to buy a cheap product for 20,000. You know that it is a salable product and an attractive price: you could easily sell it in 2 months, with a profit of purely 20%. However, you only have reserve funds for unexpected expenses. You don’t want to touch them (rightly!), Buying for cash is not an option.

So you go to the bank, where it turns out that the loan is expensive, with a commission of 5%, interest rate per year 10%, additional insurance 0.5% of the amount of credit used monthly and an early repayment fee of 5% in the case of repayment during the first 6 months.

12,000 Dollar loan for self-employed – from 100 Dollar per month

The self-employed are still not welcomed by banks when applying for a loan. But the self-employed can also be very successful and have been in business for years. Independence is often poorly rated in terms of creditworthiness.

Borrowing – important facts

Borrowing - important facts

To ensure that borrowing is positive, the self-employed person should do everything to convince the bank. A 12,000 USD loan for the self-employed is just above the small loan. So it should be possible to get a loan with little difficulty. A lot depends on the first impression. Those who can score here will receive a loan of 12,000 USD for the self-employed. But the creditworthiness that is required is not always given. Few know what they have to do as a self-employed person for lending. So information must be obtained before an application is made.

Check creditworthiness

Check creditworthiness

In order not to receive a rejection from the bank, the creditworthiness should be checked yourself. It is not very difficult. Is the applicant in the red every month? If so, the income is insufficient to repay a loan. Has a credit for self-employed persons already been recorded in the Credit bureau? It always depends on whether the entry is negative or positive. The more negative entries there are, the more difficult it will be to get a 12,000 USD loan for the self-employed.

Offers from the Internet – compare and find the right loan

Offers from the Internet - compare and find the right loan

  • Loan seekers receive a 12,000 USD loan for self-employed from the Agree bank. This loan is very high on the list with an interest rate of 1.95 percent. The monthly installment of 152.85 USD must be paid every month. The term is 84 months, which corresponds to seven years.
  • The barclaycard also has a cheap offer. The interest on the loan for self-employed 12,000 USD is 1.99 percent. This results in a monthly amount for the rate of 153.06 USD.

As a comparison, it can be seen that there are also expensive loans. Interest rates can go up to 6.25 percent.
However, the applicant must keep in mind that he can choose a different term at any time. Both the monthly rate and the interest rate will change.

Creditworthiness is not enough – bad cards at banks

Creditworthiness is not enough - bad cards at banks

Anyone who has a bad credit rating for the self-employed loan of 12,000 USD has bad cards with banks. This risk group in particular must score with its creditworthiness, otherwise there will quickly be a cancellation for a 12,000 USD loan for the self-employed. The creditworthiness is already rated lower. This is due to independence. This brings a different profit every month.

In this way, an income can never be determined as it is possible for employees. The best thing would be to offer a surety as security for the bank. However, this may not be self-employed, because this way no loan can be taken out for self-employed persons of 12,000 USD. The guarantor signs the loan agreement with the applicant. With this signature he obliges me to pay the installments if there is a loan default.

Take out credit for the business

Take out credit for the business

The 12,000 USD loan for self-employed can be taken up for the business. If it means being able to buy goods. For example, an offer from DLB Bank can be obtained. This grants a loan for self-employed 12,000 USD. But it doesn’t always have to be the best offer. Credit comparison can also help with this.

So this loan for self-employed 12,000 USD can be compared with one from the Internet. The other conditions should also be assessed. This is the only way to calculate the total 12,000 USD for self-employed. Depending on the credit rating, the lender will determine the interest rate. The profit and loss accounts of the past few months must be presented when applying.

Credit in a few hours processing time

Many people who need money urgently need a loan to be paid out in a few hours. However, this project is not always easy to implement, since the house bank in particular often takes several days to make a loan decision. If you want to get a loan in a few hours, you should therefore contact one of the numerous Internet or direct banks and apply for a loan there.

Requirements – applicant’s creditworthiness is insufficient

Requirements - 

No bank will lend to a person or family that does not have a certain minimum level of credit. This includes not only an impeccable credit bureau information, but also a secure and steady income. If the applicant’s creditworthiness is insufficient, the bank can insist on a guarantor or a second applicant who meets all of the above requirements and must pay for the loan installments if necessary. The bank can provide further information on this subject on request.

It is usually very difficult for self-employed people, freelancers or other people who do not have a fixed income to get a loan in a few hours. This fact can often prove to be problematic, as it is very common for self-employed and freelancers to find themselves in a financial shortage and unable to pay their urgently needed bills. If this condition lasts longer, this can have serious consequences, which can even endanger one’s own existence.

Application and approval

Application and approval

Those who are well informed and have found a suitable loan can apply not only in a bank branch, but also on the Internet. This approach has a number of advantages. This means that the borrower is not only independent of the bank’s opening hours, but can fill out the loan application at home in peace and without any time pressure.

As soon as the loan application has been completed, it can be sent to the bank, where it is processed immediately. If the credit bureau information is correct and all other requirements are met, the loan can be paid out in a few hours. It happens very quickly when the customer insists on an immediate transfer. Such an immediate transfer is offered by more and more banks and offers the guarantee that the customer receives his money on the same day. However, there are additional fees.