It is more difficult for an individual entrepreneur not only to get a business loan, but also to take advantage of ordinary consumer loans. There are a number of reasons why banks are reluctant to approve applications for small business owners. Let's see why IP do not give loans.
The reasons for the refusal of an individual in a loan
Some entrepreneurs do not meet the requirements of banks for corporate borrowers:
- Business Life. Activities should be conducted at least six months. Beginning IP is almost impossible get a loan. Some banks have tightened this requirement and accept applications only from entrepreneurs older than 1-3 years.
- Business transparency. Because of the desire to hide part of the activity and revenue from the state, entrepreneurs often maintain double-entry bookkeeping without reflecting real financial flows in the business. Secrecy adversely affects the financial condition of the company according to financial statements and other documents that banks use to make decisions on the application.
- Income level. For a similar reason, the refusal is received by entrepreneurs who submit “zero” declarations in order to reduce the tax burden. The Bank considers sufficient solvency when servicing the requested obligations is carried out at the expense of net profit, without withdrawing money from circulation.
- Lack of liquid collateral. The guarantor of the entrepreneur may be another IPbut what if he, too, cannot prove his income? Businessmen often draw up assets that bring profit to individuals - relatives and acquaintances, purchase vehicles and equipment from their hands without supporting documents, duly executed. Therefore, when choosing a suitable collateral, the bank is faced with the difficulty of finding liquid assets with title documents.
- Positive credit history. How to earn a credit history if it is very difficult to get a loan? Some banks consider the experience of business borrowing and personal loans of the entrepreneur himself as an individual.
The above reasons for denial of lending relate to obtaining IP loans for consumer needs. Small business risky and unstable activity, therefore, it is rather difficult to consider the entrepreneur’s income as constant and make forecasts. This is a consequence of the refusal to provide loans to persons conducting entrepreneurial activities.
IP lending conditions
If a businessman opens all the cards and demonstrates transparent accounting and reporting, according to which there is enough profit to pay off obligations, the bank can provide the required amount.
Willingly lend investment goals: the purchase of commercial real estate, equipment, new vehicles and equipment. Property purchased with loan funds is pledged under the loan.
Rates on such business loans are 15-28% per annum, the terms reach 3-7 years. If the purpose of the loan is to replenish working capital and purchase another batch of goods, the rate rises to 22-39% per annum.
Without fail, the entrepreneur will be required to conclude a policy of personal life and health insurance, property insurance of assets and the subject of a pledge. If you have an officially registered marriage, you need to get a guarantee from the spouse of the borrower.
Consumer loans for private entrepreneurs can be obtained at a lower rate by attracting family members or guarantors as acquaintances who are officially employed. Rates on cash loans are at the level of 15-25%. The amount may be several million rubles, the terms reach 5-7 years.It is often more profitable for entrepreneurs to take a regular loan for urgent needs for individuals and invest this money in a business. Then it remains repay a loan faster.
The best option for an individual entrepreneur will be contacting a bank with bank accounts. Knowing the turnover on the company's account, the bank can make a positive decision and provide a loan on individual preferential terms. Credit experts will advise the type of loan for the entrepreneur and provide a list of collateral and documents to reduce the rate and overpayment.
