When you want to grow your business, you need a lot of capital. One way to get capital is by applying for a loan, either to a bank or other credit service provider. Yes, applying for a loan is one of the strategies that entrepreneurs can do to develop and expand their business quickly. However, applying for a business loan is not an easy thing. In addition to requiring several requirements, KH Buddy also needs to consider it carefully and manage it properly so that the planned business goals can be achieved, not just run out and make a big loss to the business. Therefore, below we will describe some important things that KH pals need to pay attention to and do before applying for a loan for business capital.
What are the things to consider before applying for a business loan?
The decision to use loans as a source of business capital is not an easy one. KH buddy must consider the ability to repay debt before reaching the specified deadline. Interest charges, administration fees, and other requirements are also often a concern for entrepreneurs in applying for a loan. However, these concerns can be overcome if you take steps to prepare. You can anticipate the risks that arise because you already know the debt repayment capability. In addition, consideration and preparation also help you not to get caught up in various debt-related problems. So, what are the things you should consider before deciding to apply for a business loan? Here is the description:
Make sure the purpose of borrowing is clear
Applying for a loan to a bank can be a decision that helps your finances or makes them worse. With a clear goal in mind, KH buddy can avoid things that can make the business worse. Avoid using capital for different purposes, as it will cause problems in repayment and business goals will not be achieved.
Dig up information about the source of the loan
Before deciding to apply for a loan from a bank, make sure to find as much information as possible about the bank. Know how the loan policy is applied starting from the interest rate, product structure, and so on.
Choose the type of loan according to your needs
There are several types of debt that can be chosen according to business needs such as lump sum repayment, installments, loans without collateral or with collateral, loans with fixed, annuity, or effective interest rates, and loans with short or long terms.
Decide on a Debt Repayment Plan
Before taking out a loan, Sobat KH also needs to think long-term and determine a payment plan. Calculation of the right time period and where you also use funds to cover the installments. In addition, you also need to calculate carefully about your business development plan.
Loan Risk Analysis
Maybe your business is doing well right now, but no one knows what might happen in the future. So try to analyze the risks that are likely to occur, then relate them to the previous points. Risk is a certainty when making a loan, so choose the bank with the least risk.
Prepare the Required Documents
Regardless of the loan service option, all of them require important business-related documents as requirements. Mandatory documents in applying for a loan for business capital are usually a KTP, or passport, NPWP, monthly business income slip, tax sheet, and business plan. Conventional financial institutions such as banks usually require more requirements. Prepare all these requirements before you apply for a loan for business capital. Creditors need these documents to know information about your business. Personal documents such as ID cards are useful so that they can cross-check your credit score.
Read All Loan Terms and Conditions
This last step should not be missed when applying for a loan. Every financial institution has a set of terms and conditions that apply. Read each clause carefully and don’t hesitate to ask the teller or Customer Service (CS) if there are things you don’t understand. The best creditors always make sure their debtors can understand the lending procedures at their institution. If you are sure of the terms and conditions, sign the agreement letter or loan contract provided.
What are the requirements for applying for a business loan?
Before applying for a business loan, of course KH Friend needs to prepare several requirements that are requested. In general, there are several requirements that you need to prepare such as:
- Business has been running for at least 3 years.
- The business is not included in the type of industry or target industry that cannot be financed based on the bank’s policy.
- Passed Bank Indonesia or Financial Services Authority (OJK) checks.
- Not blacklisted by Bank Indonesia or OJK.
- Never received a capital loan from the bank in question and classified as problematic.
- Submit collateral according to the terms acceptable to the bank such as land and buildings, vacant land, vehicles, machinery, merchandise inventory, or trade payables.
- Passed the credit analysis process according to the bank’s policy.
- Have or open a business savings or current account at the intended bank.
Tips to Make Business Loans Easier to Approve
Now you know the things and conditions that need to be considered and fulfilled in applying for a business loan, be it to a bank or to other credit providers. However, it is important to remember that banks or credit provider institutions also have certain considerations and criteria in providing loans to entrepreneurs. This is because they want to minimize risk and ensure that the loan provided will be returned smoothly. Therefore, as an entrepreneur, you need to know some tips that can help you get your business loan approved more easily by banks or credit institutions. Here are some of them:
Create a Comprehensive Business Plan
Provide a clear and detailed business plan. The business plan should include a description of the business, long-term and short-term goals, market analysis, marketing strategies, financial projections, and business development strategies. This will show the lender that you have a good understanding of your business and how you will use the loan funds wisely.
Explain the Use of Funds Clearly
When applying for a loan, clearly show how the funds will be used in your business. Explain how the borrowed funds will help in the development, growth or improvement of your business. This is because lenders want to see that the funds will be used wisely to generate profits and help repay the loan.
Prepare a Complete Financial Report
Provide all the necessary financial documents, such as the latest financial statements, balance sheet, income statement, and cash flow.Make sure these documents are accurate, organized, and can be clearly understood by the lender. These organized and complete financial statements will provide a clear picture and allow the lender to analyze the financial performance of your business. That way, they can determine whether your business has sufficient financial capability to manage the loan.
The Right Form of Business Entity
Make sure your business is already a business entity, especially if it is a legal entity such as a PT (Limited Liability Company). This is because PTs are often considered more credible and stable than sole proprietorships, so banks are more likely to lend to them. Apart from banks and credit institutions, a PT also has the flexibility to attract capital from shareholders or external investors. This makes it possible to raise larger capital and be able to repay loans smoothly.
Fulfill Business Legality Documents
Lenders such as banks and credit providers have an obligation to ensure that they provide loans to businesses that comply with applicable laws and regulations. Therefore, prepare all business legality documents, such as deed of establishment, business license, NIB (Business Identification Number), SIUP (Trade Business License), NPWP (Taxpayer Identification Number), and other relevant documents. Having complete legal documents shows the trust and legitimacy of your business in the eyes of lenders. They also want to ensure that your business operates in accordance with the law, making the verification process easier for lenders.
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Those are some things that need to be considered in applying for a business loan. From the explanation above, it can be concluded that it is important to make careful considerations and preparations before applying for a business loan. That way, you will make smart decisions and minimize the financial risks of your business.
KH Contract
Well, for KH Pals who are currently developing a business and considering applying for a loan, but are still confused about the terms and procedures, it is highly recommended to consult first with Kontrak Hukum. No need to worry, because consultation at Kontrak Hukum is guaranteed to be reliable, where your data and business information are safe and protected. For a free consultation, please contact us at Tanya KH. As a digital legal platform, we can also help you to understand and fulfill all the requirements needed to get a business loan, especially related to the fulfillment of legal documents. Let’s make it easy to apply for a loan for business progress with Kontrak Hukum! For information on legal services that suit your business needs, please visit the KH Services – Licensing and Taxation page or send a direct message (DM) to Instagram @kontrakhukum.
