A successful leap into self-employment is rightly something to be proud of as an entrepreneur. Not a few people dream of being their own boss at some point. But this not only brings benefits, because despite much hard work and smart business planning, self-employed people still have a hard time with banks and savings banks when it comes to the allocation of loans. A loan for the self-employed requires additional security and a very meticulous review of the financial situation, regardless of the current success of your own business. http://bernardgrange.com has more details
Requirements and conditions for a loan
Banks are keen to be on the safe side, at least when it comes to lending to individuals and entrepreneurs. In the opinion of the credit institutions, a loan for the self-employed is associated with an increased risk of default because it is assumed that macroeconomic fluctuations will be the first to affect self-employed entrepreneurs. The self-employed usually do not have large financial reserves that can be used to bridge longer dry spells. This is especially true for those who are just starting their own business and therefore often rely on a loan from the bank in order to realize their business idea.
Ultimately, it takes more than a mere idea to get a loan decision for a self-employed loan. Without a conscientiously calculated business plan, a bank will hardly agree to finance the purchase of resources and everything else that is needed.
Such a business plan contains detailed information on how the company should assert itself on the market and what the financial means are once used for. From him also shows how well the entrepreneur has prepared for his project and whether he has the necessary knowledge or the necessary training. A certain amount of basic knowledge in business administration is therefore already required in order to persuade banks of their own project sustainable.
But not always enough and you get a rejection despite good preparation. In short, another financing alternative has to come from. If you do not want to turn your back on the familiar house bank, you can look for a guarantor or co-applicant here. For this purpose, a person from the circle of acquaintances or relatives is required, which agrees to take over the debt service in the event of a case, should the applicant be overwhelmed with it. A guarantor always jumps into the action if the borrower can no longer meet the financial obligations under the loan agreement.
From this point on, the guarantor will be liable on his own responsibility and is responsible for the full repayment of the loan for the self-employed over time. The same applies to the co-applicant, who, however, has to take care of this right from the beginning and is therefore directly involved in the contract. Both need as security a regular income, which in contrast to the applicant as possible not generated from self-employment and proven by a payroll. It goes without saying that also negative credit bureau entries, which result from existing credit obligations on the part of the guarantor or co-applicant, should not be present.
The second possibility: the personal loan
If a loan for the self-employed has been refused by the bank or if it is simply unfavorable for the applicant, the latter can also switch to a personal loan. This innovative way of lending, borrowing the loan amount from individuals, is particularly suitable for those with some credit-quality deficiencies. But that does not mean that no collateral is needed here.
The restrictions are handled only not so strictly and above all self-employed and freelancers, who are at the beginning of their entrepreneurial career, can find the coveted loan for self-employed on conditions that are justifiable. So it pays to add this possibility to the alternatives to be tested right at the beginning.