Starting your own business is not that easy. You have to solve numerous organizational and economic problems. It doesn’t work without complex financial analysis. And this is where the difficulties begin, because many founders have no money at all to cover the primary costs. Then they start looking for the necessary start-up capital.
What do the banks offer?
First of all, one has to take into account that, in contrast to classic special-purpose loans, loans for founders are not available at every bank. This type of loan is only given by larger, banks that specialize in, among other things, credit transactions.
Start-up credit can be applied for by founders of all industries and thus finance everything that has to do with starting, furnishing, designing or advertising the business.
Since there is a very high probability that the planned business will not lead to the expected success, the banks with the startup loans bear a high risk of default. For this reason, they scrutinize their potential customers and often do not like to grant loans to founders, even if all the requirements are met. This includes:
- Good creditworthiness and credit bureau information without negative entries.
- The age . The borrower must first be of legal age. But financing by banks is relatively difficult for young entrepreneurs because they mostly come straight from their training and cannot offer the bank collateral.
- A convincing concept that should be very detailed. This shows the bank how to invest the money and what perspective the business has.
- A business plan with concrete business figures or financial plan . The business plan is the basis for starting a business. The financial plan is the most important part of the business plan, which shows, for example, potential income and profits, describes what costs are incurred or how much the loan amount should be.
- Collateral. This includes, for example, land charges, cars or private wealth. Real estate is particularly popular as collateral with banks, as it rarely loses value. If banks do not get the money back, they can take existing collateral as a pledge.
- Equity. Not a must, but it is always an advantage to cover part of the capital. In addition, this can affect interest rates.
The state also provides financial support to start new businesses. For example, Intrasavings-Bank offers two models of start-up credit: with financing up to $ 100,000 and up to $ 10 million. They are characterized by a number of advantages:
- the amount of the loan can be up to 100% of the financing requirements
- long terms (max. 10 years)
- low interest rates
- initial repayment-free period (max. 2 years)
- Special repayment if the transaction is successful (repayment in full or in installments)
- Possibility of rate reduction etc.
You cannot apply for this type of loan directly from the Intrasavings bank. A corresponding application must be made through the borrower’s house bank.
Financing through private individuals
For those who do not want to turn to the bank for any reason, there is also the option of financing their own business with a loan. You can get a personal loan. As a rule, private investors invest in a strong idea, ie you have to convince them that an investment in the business can not only bring high risks, but also has great potential.
It is very important to correctly estimate the start-up capital and plan all measures carefully in advance.