Five Steps to Getting Credit for Your Business

It is fundamental to elaborate a study with the analysis of market, product, operation and finances, showing the viability.

By
January 30, 2019 14:06
2 minute read.
Investment [Illustrative]

Investment [Illustrative]. (photo credit: PIXABAY)

 
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Check out tips and guidelines on how to get credit at financial institutions, based on well-structured planning of how to invest resources. To expand business, micro and small businesses can access lines of credit specific to the segment or the purpose they want to achieve with the feature. However, before going to the financial institution and asking for resources, you need to take some precautions, such as identifying the real need for loan / financing, researching which line and bank best fit your project and draw up a business plan.

Below, you'll find out what steps an entrepreneur must take to get credit:

Step 1: Identify the need for credit

It is important to be clear about the amount of funding and the purpose of the intended resource (purchase of machinery, equipment, raw material, increase of physical structure, etc.).

Step 2: Search for information and choose the financial institution

Look for information on the lines of financing that best fit the credit needs identified in step 1 and which financial institutions operate with such lines. Do not forget: the conditions (costs, deadlines, limits, etc.) can vary greatly from bank to bank.

Step 3: Analyze the constraint factors

It is essential to have all the restriction factors (legal situation, guarantees, equity, etc.) adequate to the requirements of financial institutions.


Step 4: Prepare the business plan

You will have to show the bank that your project is financially viable. The best tool to do this is the business plan. Do not forget: some financial institutions request that the feasibility study of the project be carried out with a tool from the institution itself.

Step 5: Apply for funding

You should go to the financial institution and submit to the legal entity manager (or its equivalent) the required documentation, the requested guarantees and the business plan, showing the feasibility of the project. After these procedures, the financial institution will analyze the project and will return informing the release or restriction to the financing. But if you have a bad credit history that doesn't allow you to borrow from an official financial institution, using the personal loan option can be considered. You don't need to have a good credit history. Even in many cases, your loan can be processed in just a few minutes.

Tips

Prioritize finance machinery and equipment, preserving own resources for working capital. In the lines of financing for fixed investments, the limits are bigger, the costs are smaller, the payment deadlines are also bigger and the guarantees are facilitated.
A good history of relationship with the financial institution influences positively. Try to get in touch with the bank where you are already a customer and evaluate the conditions offered. Of course, be sure to search for other options.

The bank wants to run as little risk as possible. For this reason, it is fundamental to elaborate a study with the analysis of market, product, operation and finances, showing the viability of the project and its capacity to pay.

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