Why apply for a bank loan to start your business

Many people have ideas for developing a business, a concept or a brand. However, when you want to start your business, you quickly come up against a very important question: financing. An advantageous solution to start

The advantage of a bank loan is that you can start your business quickly without having a lot of equity. If you have good conditions, you can apply for a loan for a business creation at very attractive rates. Thus, there will be no need to pay huge sums to your bank, but above all, you will be able to get started relatively quickly. In addition, you should know that when you take out a loan for your business, the interest on the bank loan is deductible from the tax result. This is an advantage since the loan will in sum save tax on profits. This comes under corporate taxation, however, what should be remembered is that it allows you to start off on the right foot and benefit from an advantage in terms of corporate taxes, which we could not not have if you create your business with your own capital.

Unlike other forms of bank financing, the loan has the advantage of being independent in its business management and not having to report to anyone. Nevertheless, this can create a certain pressure for the entrepreneur, who is the guarantor of a certain success in repaying his loan.

A financing solution to keep your autonomy

The advantage of a bank loan is above all financial freedom. Indeed, you can remain the sole owner of your business, without the need for additional partners or investors who could own shares in the business. This is a clear advantage for keeping complete control of your project and retaining full decision-making power. In addition, the bank from which a loan will be requested will not have decision-making power over the way of managing the investment or the choices of the company.

The loan will just be a debt to be repaid, like the credit that one contracts to finance a real estate purchase.

How to prepare to obtain a bank loan?

If you choose a bank loan, you should not imagine that everything will be won in advance. Obviously, a bank does not grant a professional bank loan to everyone. We must present a case that we will defend to show the solidity of the project. The bank seeks to invest in coherent and reliable projects, so it can be very careful in the way of studying the files. To avoid a refusal, it is then necessary to prepare a good file and especially to think about various key points.

We must present a reliable project with a coherent business plan and a project that seems to meet a real market need. Obviously, these are questions to think about before you even want to start your business, but the bank will check that everything is clear in the project. In addition, you must have a minimum of equity to apply for a bank loan. As for a contribution when one wants to buy a property, equity is generally necessary to obtain a loan within the framework of a business creation.

Alternative business financing solutions

Whether it is because of a refusal of a bank loan or a desire not to have financial debt, one can find other means of financing one’s activity.

Microcredits

When it is difficult to obtain a loan for the creation of your business, there is the possibility of applying for a microcredit. In concrete terms, this form of credit is particularly supervised and only granted by dedicated organizations such as the Association for the Right to Economic Initiative . These types of loans are repayable over a short period of up to 4 years, which is very fast, but are accompanied by follow-up of the borrower to help him in his business creation, administrative management or of the development of the activity. Obviously, the conditions are different, you should know that the maximum amount is €12,000, which is low compared to a bank loan.

Crowdfunding

Another completely different solution to raise funds for your business is to go through crowdfunding or also called crowdfunding. The concept is to raise funds on the internet by presenting your project on various platforms. Internet users who are interested can then choose to support the company by making donations, or by being able to invest directly in the capital of the company. This remains at the choice of the project leader, he can also set up counterparties to thank the participation of Internet users and if his project raises the requested amount, he is obliged to continue it.

It is a practice that is particularly used in certain fields such as video games for example. This allows business creators who already have a certain reputation to easily raise funds and not need to go into debt with a loan for the creation of a business.

Business incubators

For business creators who lack funding or even experience, a good support solution is the business incubator. These structures support creators in the creation of their business. Entrepreneurs can then obtain support for a predefined period, for example 2 years. Beyond finances, the incubators come to really accompany the entrepreneur to provide him with material support, possibly premises, but also various and varied skills to help him develop his project. The objective is that at the end of the agreed period, the entrepreneur can continue his activity in the best conditions.