Capital is the main requirement that must be prepared when starting a business. This is certainly an important consideration for prospective entrepreneurs who want to open their business. Many of them are discouraged from starting a business because they don’t have enough capital. In fact, there are many alternatives that can be done to get capital, one of which is by applying for a loan to the bank. However, applying for a capital loan is not an easy matter. Banks have a number of strict rules, one of which is on the list of business capital so that only entrepreneurs who can meet all the requirements and steps can get capital loans from banks. So, what are the requirements in question? Check out the explanation in the following article.
Advantages and disadvantages of applying for a bank loan
Before deciding to apply for a loan, it is better to first look at the advantages and disadvantages of borrowing business capital from the bank itself. This is because, like two sides of a coin, applying for a loan to a bank to be used as business capital has advantages and disadvantages.
Advantages of Borrowing Capital from Banks
There are different types of loans
There are many loan products that can be accessed by customers including micro-scale businesses, from KUR to KTA and multipurpose loans. Each has advantages and disadvantages so that customers only need to adjust which one best suits their needs.
Bank Does Not Intervene in Business Affairs
Although the bank is the lender of the capital, they will not interfere in the business that is run with the money. The most important thing is the smoothness and discipline of the customer in repaying the loan used.
Has Low Interest
In general, loan products for micro businesses have lower interest rates compared to other consumptive loan products.
Collateral Secured by the Bank
When borrowing capital from a bank, customers will usually be asked to submit valuable assets as collateral or security. In this case, the bank is fully responsible for the security of the collateral.
Disadvantages of Borrowing Capital from Banks
Complicated Process
Many banks still apply a convoluted process. Where after receiving the loan application form, they will verify then conduct a survey of the business being run, re-verify, and several other complicated procedures.
Prioritize customers who have previously applied for a loan
Although it is entirely at the bank’s discretion, they will generally be picky about their customers. Customers who have already received a loan and are current in repayment will be more likely to apply for another loan, rather than new customers who are considered high risk.
If you fail to repay the loan, the collateral will become the property of the bank
This is what most entrepreneurs worry about when they want to apply for a capital loan to the bank. They are afraid that if the business fails and the loan cannot be repaid, they will have to let the assets used as collateral become the property of the bank.
Not Getting the Amount as Needed
The bank will provide a loan according to the value of the collateral submitted. In this case, when it turns out that the bank’s estimated value is lower than what is needed by the customer, it must be willing to look for additional from other sources.
4 Requirements for Applying for a Capital Loan to a Bank
Not all capital loan applications are granted by financial institutions. They have certain criteria to decide whether a loan application is accepted or rejected.
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Here are some requirements for a business capital loan to be accepted by the bank:
Has Financial Statement History
One of the things that financial institutions assess is the financial statements. If a business has a neat and structured financial report, the chances of applying for a capital loan will be greater. Through this financial report, they will assess whether your business is growing, developing, and needs financing or not.
Type of Loan Needed
Ensuring the type of loan needed is very important so that the loan obtained is right on target. There are two types of loans for businesses, namely investment loans and working capital loans. Investment loans are loans that are used to expand the business so that the business becomes bigger and stronger. This loan is given for a period of three to five years. Meanwhile, working capital loans are loans that are given as capital for a business. This type of loan is usually given in a short term of one to three years.
Document Requirements
In the loan application process, important documents such as:
- ID CARD;
- KK;
- TIN;
- Last three months’ bank statements;
- Business development and investment plans;
- Business letters such as the deed of establishment of a business entity, Business Identification Number (NIB), and so on.
Know whether the loan requires collateral or not
Some loans require collateral, and some do not. Collateral is needed to ensure that the loan disbursed by the bank, is actually used as intended so that the business is able to pay the installments.
Tips for Getting a Capital Loan Application Accepted by the Bank
Now you know what are the requirements needed to apply for a business capital loan to the bank. Then next, what is the procedure? And what are the tips to get your loan application accepted?
Determine Business Capital Needs Well
The first tip for getting additional business capital loans is to determine business capital needs properly. You must calculate how much business capital is needed, so that your business can continue to grow. Make sure the proposed loan amount is not too large and can still be borne by your business finances. Careful financial planning can help you avoid the risk of being late, let alone failing to pay.
Make the Bank Convinced of Your Business
Before approving a loan application from its customers, the bank will usually consider several things regarding the data of the prospective borrower. Therefore, make sure you can convince the bank of the reason why you are applying for the loan. Explain to the bank if the type of business that will be run is a business that has good prospects in the future. You can convince the bank by detailing as clearly as possible the reasons why you are applying for the loan.
Good Understanding of 5C Concept
Another tip in applying for a capital loan is to make sure that you understand the 5C concept that is popular in the business sector, namely Capacity, Collateral, Character, Conditions, and Capital. These five aspects will later be taken into consideration by the bank in deciding whether you deserve a business capital loan or not. The meaning of the 5C concept is:
- Capacity: The ability or capacity of the businessperson to repay the funds provided as business capital. The bank will see it from how the businessman manages finances from the income earned.
- Collateral: Assets used as collateral when applying for a loan.
- Character: The bank’s assessment based on the personality or characteristics of the businessperson. For example, background and so on.
- Condition: The effect of market conditions on the business.
- Capital: The net worth of the business and all rights as a businessperson within it.
Have as Complete Legality Documents as Possible
Having complete legality documents is important to increase the chances of applying for a business capital loan at the bank. This will give a positive impression to the bank because they will assess that the business being run is indeed legitimate and complies with the rule of law. The legality documents that are usually needed to apply for a capital loan to the bank include the deed of company establishment, personal and business entity NPWP, NIB, certification, company bank account, and financial statements. This is an explanation of the requirements and tips for applying for a loan to a bank to get business capital. If the loan application has been approved, you can start running and developing the business you dream of. Make sure that you run the business as well as possible so that you can repay the loan according to the agreed time and smoothly pay the installments.
KH Contact
Well, for KH Pals who are also currently in need of a money loan for their business capital, but are still confused about the requirements and procedures that must be carried out, you can just consult with Kontrak Hukum. Yes, in order to bring convenience to business people in running their business, we present Digital Business Assistant (DiBA) for all back office needs!
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Together with DiBA, we will help you with consultation, fulfillment of business legality documents, tax records and financial statements, which can help you apply for capital loans to banks. Yu, simplify all business matters by subscribing to KH Services – DiBA. If you have any other questions, please contact us at Ask KH or send a direct message (DM) to Instagram @Kontrakhukum.
