Start-ups, but also established entrepreneurs, face the challenge in various situations of having to raise fresh capital for investments.
Often the first route leads to your bank, which will usually require a detailed business plan from you.
It is important to prepare your own business idea in a well-founded and comprehensible way. The business plan is first and foremost a structured working paper, with numerous formal and informal requirements, for the realisation of an entrepreneurial project and for the justification of plausible future sales.
Note: Depending on the investment phase and the amount of financing required, the bank is not always the right partner. Furthermore not every bank operates the same way, but there are some general procedures and aspects you definitely need to pay attention in advance.
Procedure: What do banks pay attention to when applying for financing or loans?
In most cases, the bank first conducts a consultation with you, in which the bank checks all essential factors for validity. As a potential borrower, the aim is to be able to present a logically structured business plan with a clear business model. In order to apply for a loan, you must have the necessary documents ready, whereby the financial plan is essential in any case.
The credit reviewers need information on the amount of equity capital, the need for outside capital, existing securities as well as founding costs and investment amounts. In addition to the monthly costs, including your own standard of living, the yield forecast and a plausible liquidity plan are mandatory components of any audit. In order to get a loan approval, it is also necessary to agree on conditions such as the amount of the loan, the term and repayment modalities and the specific use of the loan requested.
Although the business plan, including the financial section, is essential for the loan application, there are other assessment criteria that the bank weighs up when making the financing decision. These include the following criteria:
– All potential borrowers should have reached the age of majority. In addition, some banks have introduced an internal upper age limit, as the risk of default for older people increases significantly.
– Depending on the country you want to set up a business, you usually need at least a permanent residence status to obtain a loan.
– For your financing enquiry you need a clear legitimation of your person by an official document.
– Of course, your asset and income situation is of particular importance, as the bank consultant must weigh up the financial reliability for the risk assessment. This is particularly reflected in the financial plan of the business plan, which is why confidence in its plausibility must be guaranteed.
– Your available share of equity capital for start-up financing significantly increases your chances of successful financing. The higher, the better. Although no equity capital, depending on the project, is a definite exclusion criterion.
– As part of the credit check, the bank checks your creditworthiness, depending on your countries databases or further reviews. In the case of entries such as insolvencies, affidavits in lieu of an oath, defaults on old or existing loans or even a loan or account termination, a positive financing decision is rather unlikely.
– Depending on the amount of the credit line, the banks generally require appropriate collateral for the loan. These can be guarantees, tangible assets, insurance or other deposits. In the case of final financing by a development bank, however, the specifications for any collateral are often omitted.
Preparation and a profound business plan as decisive success criteria
It goes without saying that the way you prepare yourself determines the impression you and your company will make in the whole audit process. This preparation is reflected in your individual business plan and can be checked by the bank at a glance. The detailed recording and calculatory presentation of all required figures as well as the plausibility of your implementation plans in a high-quality business plan sharpens the critical view of your own company. This enables you to develop a reflective view of your project and to prepare yourself with specific arguments for sensitive queries. On the other hand, this also signals to your negotiating partner your ability to work in a structured manner and the seriousness of your concern.
Consequently, the bank will always attach great importance to your business plan in the credit application. After an intensive review of your business plan and a meeting with your advisor, risk controlling will then be carried out by another department of the bank. If both votes are positive, the loan application or financing is approved.
Professional support for your business plan
The formulation and elaboration of a professional business plan is time- and know-how-intensive. For this reason, various consultants offer the possibility of having a business plan created for you and guarantee a high-quality implementation in terms of content and form. In this way, you can ensure in your credit application process that the intended approval will not fail due to formalities, non-considered schemes or the incorrect presentation of the business plan key figures. A serious consultant knows from experience in which context certain contents, figures and formulations must not be missing.
If you want to be on the safe side for successful bank financing, if you are aiming for serious financing and are prepared to invest into an business plan expert, from whom you can have the business plan drawn up in well-founded preliminary work, this might be a decisive help for you.
In this case, it is essential to choose a suitable expert who knows the specific context of bank financing very well. Meaningful decision-making aids here are insights into the working methods and procedures, references of the potential consultant and a serious appearance of the website. One of the prominent experts with years of experience in creating professional business plans for successful credit applications is the business plan consultancy Businessplan.org.