Borrowing is often a necessary step for many entrepreneurs who want to create, take over or develop their business. Obtaining the agreement and negotiating the conditions can be facilitated by following some wise advice.
Bankers finance projects while focusing on reducing risk as much as possible. They study the project for this purpose but are also very attentive to the way in which the project will be carried out. Thus, to obtain suitable professional financing , it is important to prepare your application carefully and to be aware of the importance of certain factors.
Submit your credit application at the right time
Every project has a timing. The banker’s experience helps him to perceive when a project is mature and when it needs to be worked on. Generally speaking, a banker will only agree to finance a project from the seed or launch phase. The ideal is to have been able to test or launch the activity. As soon as the start of an activity exists, an economic model that can be studied and measured is put in place.
This replaces assumptions with facts and gives credibility to prospects with financiers, bankers and potential investors.
Presenting the project at the right time also means adapting to the banks’ pace. Some banks slow down their credit allocations once they have reached their objectives. If this is very visible for traditional loans (real estate, etc.), it is a bit the same for credits or professional loans . After a certain time, banks limit their exposure to risk.
Market research is a central element of business creation. It must show that you know your target market (typical customers, segments, life cycle, competition, catchment area, etc.) and that your offer meets a real demand.
Being most often one of the founding elements of the commercial strategy, the market study gives credibility to your project while showing the potential of the project, its relevance and its feasibility.
Plan a personal contribution
The personal contribution is a means of financing but also of showing your banker what your level of involvement is in your project. Generally speaking, your personal contribution should represent approximately 35% of your financing request.
If it is lower, consider finding additional financing that will increase your contributions via a capital increase. Love money, crowdfunding and grants and sometimes competitions are ways to raise funds.
By taking action in advance, you can also apply for an honorary loan ( France initiative or Réseau entreprendre ) or use your ARE from Pôle Emploi in the form of an ARCE contract. These additional contributions will help you build up your contribution. If they are significant, they can also help reduce the amount of the loan, or conversely increase it thanks to the financial leverage effect.
Finally, remember to limit the expenses of your forecast in order to limit the amount of the loan. Coworking, accommodation in an incubator and aids such as ACRE allow you to save on charges.
Block your checking accounts
If you have current accounts, consider blocking them to reassure the banker. He must ensure that the loan you take out will be used 100% for the development of the company and not for the repayment of your cash advances.
Be and present a credible project
The advisor who receives you must understand that you have the means and the determination to achieve your goals. Several elements will contribute to this:
Show that you are not alone and that several partners support and encourage you (organizations, associates, institutions, suppliers, investors, etc.);
Work on your forecasts so that they are realistic. Only present figures that you can support. Companies whose activity explodes in the first few years are extremely rare. There will always be time to look for new financing later.
Present a suitable and reassuring legal framework. Be careful to choose the right legal status , to make a partnership agreement and to plan for the future (company with variable capital, suitable invoicing software and management tool, etc.).
