The main activity of the bank is the financing of the economy through its public and private companies. It is primarily a business, and like any business, it seeks first to optimize its profitability and especially to minimize its risk. To consolidate structures in the event of a financial crisis, the respect of a certain capital ratio is imposed in relation to the credits granted.
This is why your bank is extremely cautious when applying for credit. It first analyzes the risks involved. It is also possible that it shares it with as many partners as possible in order to limit the negative effects.
From this arises the difficulty for companies to obtain bank financing. Each bank has its own criteria for judging whether a credit application is acceptable or not and thus providing financial support to a company.
For the proper functioning of your business, you need this best place to get a home loan, so you will still persist … In order to put the odds on your side, some key elements in the agreement or not the loan are to be considered. The bank will judge your claim based on these various factors.
Different categories of loans
There are 4 main categories of FHA loans according to your needs.
The medium or long-term bank loan is used primarily to finance your new securities purchases.
Leasing makes it possible to finance the purchase of movable or immovable property. It has a purchase option. Combining the bank loan and the leasing proves wise if the amount to be financed slows down the bank.
The long-term lease gives the possibility of renting a property, but it does not include a purchase option.
The purpose of short-term credit is to finance the operating cycle of the business. Your solvency guarantees must be reliable and certain. This type of FHA loan is only for companies already created.
Training and work experience
In the eyes of your bank, your initial training, as well as your professional experience, are an integral part of the factors to be taken into account. Depending on best place to get a home loan, a certain type and level of training and / or some professional experience is required. Depending on the sector of activity, for the bank, you will be, in relation to these criteria, judge fit or not to manage such a project. Opt for a project that is, as far as possible, linked to your level of training and professional experience.
A viable scheme
To determine if your project is viable or not, it must first be profitable. It’s up to the bank to make that assessment, as it does for everything else, since it’s up to them to make the final choice. However, take the lead in demonstrating the profitability of your project. Gather important information. You must submit a forecast of activity (balance sheet, tax profit and loss account), in principle over 3 years, a document that plays a key role in the choice of the bank. Regarding profitability, the fact that your project is profitable is not enough. This profitability must allow you to pay enough to be able to easily cope with various credit deadlines, but also to leave room for maneuver for the development of your business. To leave also a margin of safety would be a plus. The assumptions presented as a result of your business plan should be as realistic as possible and related to the WCR (Working Capital Requirement) 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 this is not based solely on this criterion, the more collateral you have, the higher the likelihood of your claim being accepted by the bank.
The minimum contribution required
In terms of personal contribution, proportions must be respected. It is advisable to balance capital and loan funds as much as possible. However, there are no general rules. Some banks would consider that the minimum ratio is 25 to 30% of personal contribution in a business start-up or business start-up project, when the loan finances a venture at a limited risk, this is that according to industry standards, the risk of default is almost nil. The proportion varies according to the overall amount of the file and its holder. In other words, your bank will pay particular attention to assessing your personal wealth and your room for maneuver after paying your contribution, if it exists. The whole thing is to balance the balance: your bank will be all the more satisfied if your contribution is relatively high but will see too much risk if, as a result of this, you end up with too little financial means. You can appeal to your loved ones to help you in financing this contribution. The bank analyzes your business plan, and the lack of equity is unacceptable.
The Competition Of Banking Institutions
It is wise to compare the offers of different banks for your loan application. In order to favor the best offer, compare the different offers of banks with their terms (interest rate, time and repayment period, etc.). These terms may vary by bank. In case you hesitate between several banks, put them in competition to offer you the opportunity to negotiate and obtain conditions that will be all the more favorable (less restrictive clauses, for example). You can also choose to go through a broker to facilitate contact with banks. It is in a sense for them the assurance of having an examined and presentable file that they will consider much more seriously. It is also for you the assurance to find one, even several banks, likely to be interested in your project. This saves you time. To avoid any additional stress, do not hesitate to ask for the time to examine the file from the first meeting with your banker.
No need to minimize the amount you need to borrow. You would run the risk of running out of money. You have to leave enough room for maneuver if the need to react occurs, especially in case of cash flow problem. In case of need for financing, the bank may no longer grant you a new loan, or refuse a credit limit.
Do not resort to borrowing based solely on your own resources thinking that this will be enough to run the business. To mitigate any cash flow problems, at least 20% of the company’s needs must be kept in capital by your personal contributions.