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    Thread: What is the best method for getting a loan from the bank to start up a business?

    1. #1
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      Default What is the best method for getting a loan from the bank to start up a business?

      Hello friends, i have just noticed that getting a lone from the bank to startup a business has been very challenging and it seems that bank are not always willing to finance a start up. You might end up going through the rigorous loan collecting process and yet you end up being turned down, is it that we do not follow the right steps when writing the application or that the banks do not like to just support young people who are willing to start a new business. I have thought about his several times. The government keep talking about creating more jobs but then the process of getting the finance to get these jobs started is always a big challenge I keep wandering if this is one the politics they keep playing or maybe is there any other method of getting a loan in a much easier way from the banks that we do not know?


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      What is the best method for getting a loan from the bank to start up a business?

      This is a question that borders on entrepreneurship, so I am going to give an answer from the perspective of an entrepreneur. First, you need to understand that banks are in business to make money and they also try to minimize costs and maximize profits, just like the individual who needs a loan. They try to avoid losses if they can, and part of the losses of banks comes from what is called toxic assets. Toxic assets, among other things, is made up of non-performing loans.

      Banks have learnt that the most likely source of non-performing loans is brand new startups.They, therefore, scrutinize the management staff of these startups and subject their loan applications to very strict requirements. They lay a lot of emphasis on the quality of the business plan/proposal, whether a feasibility study has been prepared, the expertise of the person who prepared both the business plan and the feasibility study, the quality of collaterals/security being tendered, the credit history of the entrepreneur/startup owner(s). Credit Administrators have perfected the art of screening loan applications and reducing the risk exposure of banks to potential toxic assets to the barest minimum.

      One of the more noticeable consequences of the tight screening of loan applications from startups by banks is that existing relatively prosperous businesses find it easier to acquire loans from banks than new businesses. The rationale for banks preferring to lend to existing prosperous business rather than startups (which is the case in Nigeria) is that startups are much more likely to fail than existing businesses.

      An entrepreneur can improve the chances of successfully securing a loan for his/her startup by ensuring that adequate feasible study is done prior to the loan application. The business plan/proposal should emphasise risk management, SWOT analysis and sensitivity analysis. The entrepreneur should also endeavour to provide quality collaterals/security or a sort of guarantee - in most cases, it is a cardinal requirement. In the end, it really boils down to being able to convince the credit manager that your business will most likely not fail and that the bank's money will not be lost.


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      it is always difficult to get loans from banks, to do so, you need to follow strict rules and requierements and you must have a guaranted documents to recover the loans in case if you loss in your project , you need also to negociate about the interest once you begin your steps to get the loans, if you're a successful trader and want to be funded by banks in forms to loans, it's better to forget this way, you need to search for firms and trade their capital but you still need to pay fees for that and this requieres a good record trading statement from you.


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      Quote Originally Posted by kanyB1 View Post
      Hello friends, i have just noticed that getting a lone from the bank to startup a business has been very challenging and it seems that bank are not always willing to finance a start up. You might end up going through the rigorous loan collecting process and yet you end up being turned down, is it that we do not follow the right steps when writing the application or that the banks do not like to just support young people who are willing to start a new business. I have thought about his several times. The government keep talking about creating more jobs but then the process of getting the finance to get these jobs started is always a big challenge I keep wandering if this is one the politics they keep playing or maybe is there any other method of getting a loan in a much easier way from the banks that we do not know?
      This issue has to do with the Country first before any other thing and this is because on average each Country has their own preferred and laid out ways to get Bank loans so you have to visit your bank to make sure that you get all the information from them. The main most important thing about Bank loans is the interest that you will use and pay it back. So make sure you find out your Countries Central bank interest rates and then calculate to know exactly whether the amount you should pay back is okay and not exorbitant. Good Luck.


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      you should have a job or big business to get a good loan from the bank but there's an important point you have to know it :
      - if you need this loan to start your trading in forex this will be a very big mistake because the forex is very dangerous business and you have to trade in forex with the money that you are ready to lose it .
      - but if you need this loan to start good business or project this will be very good to you but don't trade in forex with loan but only trade with the money that you are ready to lose it .


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      what is the best method for getting a lone from the bank to start up a business?
      Loans are kind of a borrowed money given to an individual or collection of persons with the aim to fiance a project, business or anything else with a promise to pay back to the lender with a special agreed percentage interest.

      However when it comes to financial institution like the banks, they borrowed an individual loans with the prospect that he submits a collateral worth the value of the loan he wished for before his request can be granted. But in major cases we have seen its difficult for banks to give business starters loans even after meeting up the condition stipulated by the banks.

      This have however made entrepreneurs who don't have money to finance a business have a hard time to boost their dream business and just like someone pointed out, banks feels that its hard for a starting business to flourish and thats why even after the right process of applying loans, most starters gets turned down.

      banks would prefer granting loans to established firms and high profile companies who have made name already because they believe they are capable to offset loans granted to them and they have lots of assets to fall upon and won't equally like their image to be tampered with because of loans. However its not always the case because we see cases where big firms can't offset their loans and would amount to bad loans for the bank itself.

      In this case I think the government need to intervene for mostly new starters that wants loans to finance their dream business. In my country we have some SME process like the Bank of agriculture and the rest. This way small start-up can apply for loans to start a business and look to get them with little payable interest within a time frame. However even with this process most new starters finds it hard to get loans.


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      What is the best method for getting a loan from the bank to start up a business?
      The best method is to have a very good business plan and to have a unique and special idea. If you have those things then what you really need to do is to sell it, you need to present the idea so good that the bank will think it is a good idea to give you a loan. I personally think this is rather difficult but if your presentation and ideas are good then it is possible.

      It is important to a lot of research to get this done. For example, how many others are there that do the same thing as you, how big is the market could you expand and become a big company, how long time would it take for your company to become successful. Each of these subjects need to researched and present in your presentation and also you need to have done a very detailed search.

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      There is a basic rule in the world of business and financing, it is the fact that banks don't give loans to startup businesses and the reason is simply because most start up business failed in the first five years of their establishment, it is just a basic calculation of risk which is normally done before a loan is given out, if you don't have experience in handling your already existing business, there is no way you will become successful.

      Banks are interested in companies that are already into doing something, their goals is to help you expand your business to the level that you are might not need a loan again as the firm will now be capable of providing for itself. So don't even ask for the process of obtaining a loan when you obviously don't have anything in ground, it is a waste of time.


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      Actually it's not easy to get a loan from bank for most especially the startup business.
      Banks don't just give out loans without a very massive plan in plan.

      Banks and other traditional commercial lenders offer affordable interest rates, but they are reluctant to lend to small businesses because they’re risky investments. Only about half of small businesses survive their first few years, And if the business goes under before the owner has finished repaying the loan, it’s unlikely the lender will get their money back.

      This is why government business loans are an excellent option for small business owners, but it's not everyone that get this


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