IP crediting - conditions and reasons for refusal in credits
It is more difficult for an individual entrepreneur to not only 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 the PI do not give loans.
The reasons for the failure of PI in the loan
Some entrepreneurs do not meet the requirements of banks for corporate borrowers:
- Business life. Activities should be conducted for at least six months. Beginners IP is almost impossible to get a loan. Some banks have tightened this requirement and accept applications only from IPs older than 1-3 years.
- Business transparency. Because of the desire to hide part of the activity and revenues from the state, entrepreneurs often conduct “double” accounting, not reflecting the real financial flows in the business. The secrecy adversely affects the financial condition of the company according to the financial statements and other documents that banks use to make a decision 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 an entrepreneur may be another individual entrepreneur, but what if he, too, cannot prove income? Businessmen often draw up assets that bring profits to individuals - relatives and acquaintances; they purchase vehicles and equipment from their hands without supporting documents that have been properly drawn up. Therefore, when selecting a suitable pledge, the bank faces the difficulty of finding liquid assets with title documents.
- Positive credit history. How to earn a credit history, if you get a loan is very difficult? Some banks consider the experience of business borrowing and personal loans of the entrepreneur as an individual.
The above reasons for refusal of lending relate to the receipt of IP loans for consumer needs.Small business is a risky and unstable activity, therefore it is rather difficult to count a constant income of an entrepreneur and make forecasts. This is a consequence of refusals to provide loans to persons engaged in entrepreneurial activity.
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.
They willingly lend investment goals: the purchase of commercial real estate, equipment, new transport and equipment. The property acquired on the loan proceeds is granted as collateral for the loan.
The rates for such business loans are 15-28% per annum, the terms reach 3-7 years. If the purpose of lending is replenishment of working capital and the purchase of another batch of goods, the rate rises to 22-39% per annum.
It is mandatory for the entrepreneur to require a personal life and health insurance policy, property insurance and a pledged item. In the presence of an officially registered marriage, you need to secure a guarantee of the spouse (s) of the borrower.
Consumer loans for individual entrepreneurs can be obtained at a lower rate by attracting family members or guarantors, who are officially employed, to co-borrowers. Cash loan rates 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 an ordinary loan for immediate needs for individuals and invest this money in a business. Then it remains faster to repay the loan.
The best option for the IP will be to contact the bank where the current accounts are open. 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.
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