Bankers and the relationship with banks are evolving due to the appearance of online banks which, through their modernity, provide a new way of communicating between them and their customers. Proposals from banks continue to flow in to customers and they can now without hesitation turn to one bank then another and put them in competition if their rate is not attractive. When creating your business or launching a new project, you want to request a loan from the bank. It’s not always easy to be granted this loan… So how do you go about it?
What to keep in mind
The bank’s main activity is financing the economy through its public and private companies. It is above all a business, and like any business, it first seeks to optimize its profitability and above all to minimize its risk. To consolidate structures in the event of a financial crisis, compliance with a certain equity ratio is imposed in relation to the credits granted. This is why your bank is extremely cautious when applying for credit. It first rigorously analyzes the associated risks. It is also possible that she shares it with as many partners as possible in order to limit the negative effects. This makes it difficult for companies to obtain bank financing. Each banking establishment has its own criteria for judging whether a credit request is acceptable or not and thus provide financial assistance to a company.
For the proper functioning of your business, you need this loan, so you will still persist… In order to put all the chances on your side, certain determining elements in whether or not the loan is granted must be taken into consideration. The bank will judge your request based on these various factors.
The different categories of loans
In the eyes of your bank, your initial training, but also your professional experience, are an integral part of the factors to take into account. Depending on the nature of the project in question, a certain type and level of training and/or professional experience is required. Depending on the sector of activity, for the bank, you will, in relation to these criteria, be judged capable or not to manage such a project. Choose a project that is, as far as possible, linked to your level of training and professional experience.
A viable project
Generally, banks tend to finance projects for which they have a minimum of knowledge on the subject. With some exceptions, loan requests for innovation and research are therefore more difficult to obtain. To determine whether your project is viable or not, it must first be profitable. It is up to the bank to make this assessment, as for everything else, since it is up to it to make the final choice. However, take the lead by demonstrating the profitability of your project. Gather important information. You must present an activity forecast (balance sheet, tax income statement), in principle over 3 years, a document which plays an essential role in the choice of bank.
Concerning profitability, the fact that your project is profitable is not enough. This profitability must allow you to pay yourself enough to be able to easily meet the various credit deadlines, but also to leave room for maneuver for the development of your business. Also leaving a safety margin would be a plus. The hypotheses presented arising from your business plan must be as realistic as possible and linked to the WCR (Working Capital Need) which is determined by the difference between your stable resources and your stable jobs. To do this, rely on specific documents (quote, order commitment, etc.). Although it is not based solely on this criterion, the more guarantees you have, the higher the probability that your request will be accepted by the bank. Bank loan repayment simulators allow you to calculate the amount of payments according to the parameters linked to the loan in question.
The obligatory minimum contribution
In terms of personal contribution, proportions must be respected. It is advisable to balance equity and loan funds as best as possible. However, there are no general rules. Some banks would be of the opinion that the minimum ratio is 25 to 30% of personal contribution in a business creation or business takeover project, when the loan finances a business with limited risk, this is that is to say that according to the standards of the sector concerned, the risk of failure is almost zero.