Applying for a loan as an entrepreneur – what to consider

Apply for credit as an entrepreneur

Self-employment has many advantages: you are your own boss and can therefore implement your own ideas. However, when it comes to expensive purchases for which a loan is necessary, things can get difficult. This article provides you with tips and tricks that will help you apply for a loan as an entrepreneur. To ensure that the urgently needed windfall is within reach.

Apply for a loan as an entrepreneur – possible obstacles

As a self-employed person you can manage your own time. However, when it comes to money, your freedom is often lost. If the self-employed need a loan, they often have a more difficult time than employees, since they have to fulfill a large number of conditions and requirements.

You should consider the following points if you want to apply for a loan as an entrepreneur:

1. The biggest hurdle in applying for a loan is the lack of proof of income. Banks require collateral in order to be able to repay the money. Since self-employed people often do not have a regular income, lenders place this occupational group in the risk category. It is particularly difficult for newcomers to the profession or founders, because they can provide neither data nor experience and proceed only on the basis of vague forecasts.

2. The next decisive point is the industry in which you are self-employed. Doctors, for example, have fewer problems obtaining credit than craftsmen or artists.

3. Not all security is the same. Since the income of self-employed persons often does not provide enough security for the granting of a loan, personal and material collateral is used. Personal security can be compared to a guarantee, which establishes the necessary creditworthiness. Physical collateral includes real estate, endowment insurance, shares, and machinery or vehicles.

What loans are available for the self-employed?

For business purposes, the following types of credit are available to german self-employed persons:

  • Corporate credit: the various credit providers often offer special forms of credit for the self-employed, e.G. For the purchase of machinery or vehicles.
  • Working capital loan: this can be used to purchase goods or materials or to overcome financial bottlenecks. Similar to an overdraft facility, relatively high interest rates are charged.
  • Investment loan: you can choose this type of loan to purchase investment goods. It serves to expand and increase the value of the company, for example through the purchase of machinery. Due to the earmarked nature of the loan, interest rates are significantly better.
  • Development loan from the kfw banking group: the kreditanstalt fur wiederaufbau (kfw) is a national development bank that, among other things, also provides support for start-ups and small and medium-sized businesses. There are special founder loans and entrepreneur loans that are granted at favorable interest rates and sometimes with repayment-free initial periods.
  • State microloans: entrepreneurial activities are also financed by the state microloan fund germany. Within the framework of an initial loan, between 1.000 and 10.000 euros can be obtained. If regular repayments are made in the first six months, a further loan can even be applied for – but the total volume must not exceed 25 %.Do not exceed 000 euro.
  • Federal and state funding options: the federal government and the states offer various loan programs to provide financial support for the self-employed.

Requirements for granting credit to the self-employed

As difficult as it may sound, you can significantly increase your chances of credit approval as an entrepreneur by following a few tips. The following measures will help with the implementation:

1. It is imperative to be able to submit complete business documents. This includes income tax receipts for the last three years, a profit and loss account, a current overview of running costs and a business analysis. In principle, a positive numerical trend over the last three years is a good basis for the development of microcredit. If you have been self-employed for less than 36 months, you fall under start-ups and also need a business plan and a detailed resume when applying for a loan.

2. A positive credit rating helps immensely on the way to a loan. There should not be a negative SCHUFA score. Among other things, this includes ensuring that liabilities are always paid on time.

3. If you can provide collateral when applying for a loan, you are at a clear advantage. Either tangible collateral, such as z. B. Term life insurance or real estate, or personal securities in the form of a surety bond. Business investments also usually add value to the company and can be advantageous to the lender.

The self-employed group certainly represents a separate category for banks and lenders. There is much to consider. Good preparation in all areas is of great importance here. This also includes informing yourself in advance about the different types of credit and the associated conditions. Whether you use a loan calculator online or talk to your bank in person, you should always compare several offers and options.