The economy is showing signs of recovery . This makes the environment more conducive to lending to micro and small businesses. But what are the necessary steps to have no problems with financing and attract more customers to your business?
The answer you will check in this post. In it, we are going to give valuable tips to entrepreneurs to intelligently assess the need for credit and to avoid losing control of finances to the utmost.
We will also give suggestions on the procedures for getting a loan on favorable terms and not waste too much time on the bureaucracy. We will also show how entrepreneurs should choose a line of credit and negotiate a financing with a financial institution. Check out!
How do I know if I need a loan for my company?
At a time of swings in the economy, one needs to think about how a loan can help the company stand out. Sometimes, the entrepreneur has a strong desire for the business to grow quickly and ends up taking a step higher than the leg. How can this mistake be avoided?
The answer is to see if you really need to get a loan. The measure should be done by analyzing the purpose of money. In general, organizations take out loans to have greater working capital and increase the bargaining power with suppliers, which is very important to make attractive deals for consumers and expand sales .
Entrepreneurs can also evaluate the possibility of having debt relief. In this case, the initiative should cause the company to enter into an agreement with the financial institution to repay the installments more easily and increase the investment capacity . Otherwise, the action may make it unfeasible to maintain the business.
Tip: Learn which types of credit can be used to clear debts.
Another aspect that weighs when it comes to getting a loan is to seize the opportunity to grow with sustainability . For example, imagine a restaurant that is expanding the customer base than expected and has the potential to increase the ability to receive customers.
However, it will be necessary to do a work of expansion that will require financial resources not available at the moment. Undoubtedly, a good alternative for the company in this case is to opt for financing.
Fearful of contracting almost priceless debts, some entrepreneurs have a resistance to joining loans for micro and small businesses. This can be easily solved when estimating the impact of interest on installments and the ability to pay installments.
If the financing will provide a positive return in the short, medium or long term, it is a sign that the timing is appropriate to risk and leave the comfort zone . Of course, this action should be done with enough prudence not to seriously compromise the financial health of the business.
Tip: Understand why a loan can be considered an investment
How do I know if I can get a loan for my company?
Choosing the right time to opt for micro and small business financing and establishing how resources will be used are undeniably essential measures to achieve good results .
Therefore, it is recommended, before taking a loan, to make an assessment of the economic scenario quite accurately and accurately. This task should answer some questions, for example:
How much money do I have available to invest?
What is the indebtedness capacity of the business?
What are the expenses that have the greatest impact on the organization?
What is the level of billing?
What is the revenue forecast for the coming months and years?
When doing a financial analysis and a sales estimate, a company will be in a better position to evaluate whether or not it can get a financing. Depending on the scenario, you have to wait a little longer so you do not make a serious mistake in running the business.
Many companies end up closing the doors, because they do not properly analyze the capacity of indebtedness. Another important measure to evaluate the viability of a loan is to measure how this investment can impact the quality of services .
Depending on the circumstances, an entrepreneur chooses to reduce expenses with suppliers and employees to pay the installments. On the other hand, this can seriously affect the service offered, generating risks of alienating clients.
Reclaiming a consumer is a virtually impossible task. Therefore, loans to micro and small businesses must be done with enough intelligence, so as not to affect the services rendered.
Having fewer customers is often synonymous with less revenue. That is, less money to pay the installments. This scenario causes the debt to become priceless, leading the entrepreneur to bankruptcy.
If an entrepreneur is unsure whether to finance a work or obtain more working capital , it is worth having the help of consultants from a credit union or other financial institutions. Being well informed is one way to make the right decision to keep the organization running smoothly.
Tip: How can a loan help your company stand out?
What are the main types of loans for micro and small businesses?
It is impossible to understand the need to opt for financing, to choose the right moment to contract this type of investment and to study the feasibility of doing so without seriously studying financial health .
There are several loan options for micro and small businesses. Knowing them is a great way to avoid problems with the increase in benefits caused by high interest rates.
To help you keep your accounts up to date and the high level of service quality, we will present financing alternatives designed for low-income corporations. Follow us!
It is a form of loan widely adopted by citizens and legal entities. However, this does not mean that it is an interesting financing option to be used without proper planning.
By accommodation and lack of control, entrepreneurs end up taking this feature routinely. That is, it is as if it were part of the company’s budget. This measure should be avoided to the maximum, because this type of financing has one of the highest interest rates on the market.
In order to avoid high debt due to the excessive use of overdraft, the tip is to negotiate with the financial institution the interest rate and the available value, for the company to use it in cases of extreme necessity.
The ideal is not to use overdraft to count on working capital. The most appropriate is to adopt it to pay unexpected expenses. In this case, the entrepreneur must be sure that the money used will not impact the progress of the business in a significant way.
With a lot of similarities to the overdraft, the secured account is another loan option for entrepreneurs. It consists of a revolving credit in which the interest is directly related to the amount used.
To rely on the money, the entrepreneur provides the financial institution with some type of guarantee, such as the duplicates. In relation to the overdraft, it has as main advantage a lower interest rate .
The guaranteed account is widely used for the purchase of equipment and raw materials. In addition, it stands out as offering entrepreneurs a great freedom to use the financial resources, which helps to give more dynamism to the business.
Other credit lines
Overdraft and guaranteed account can be good quick cash options for a business as long as this is done with planning. In the family agriculture segment, the investor must carefully analyze the alternatives to obtain more financial resources.
One is microcredit – aimed at small entrepreneurs who are starting a business or wanting to invest to improve performance. One of the great advantages of this type of financing is the attractive interest rate.
Microcredit is provided with low interest rates and terms that are generally adequate to the investor’s financial situation. This is essential for the entrepreneur to control spending and pursue sustainable growth .
Another attractive alternative for the granting of rural credit is the Employment and Income Generation Program (PROGER), created by the Ministry of Labor and Employment (MTE) and using funds from the Workers’ Assistance Fund (FAT).
Aimed at micro and small businesses, this program allows you to obtain working capital in a simple and fast way or to capture resources to improve services. An entrepreneur can get a loan to buy, for example, cargo vehicles that will be used to transport production.
Tip: The advantages of cooperative loans compared to banks
What is the ideal loan for my company?
Undeniably, it is not a simple task to identify the best financing option for a company. To make the ideal loan, it is imperative to research hard and ask the opinion of consultants of financial institutions, such as credit unions .
Borrowing money without proper planning is an unacceptable misunderstanding in a scenario that requires a lot of responsibility for finances. Identifying a formula for companies to opt for financing without compromising cash would be a dream come true for many entrepreneurs.
On the other hand, it is possible to adopt some procedures to invest correctly and provide good results for your business. The first step is to establish the purpose of the loan. In this way, it is easier to locate the most appropriate lines of credit for the company.
Another positive measure to assess how financing can contribute to growth is to correctly estimate the value needed to be used by the corporation. This calculation must be done very carefully, to respect financial health and make the investment useful for the growth of the company.
After that, one must assess whether an interest rate is attractive and the impact it will have on the parcels. It is also appropriate to analyze the amount of benefits to be paid, which corresponds to the time of the financing (6 months, 1 year, 2 years, 5 years, etc.).
If there is a shortage to start repaying the loan, the entrepreneur can have a greater tranquility in the management. This enables you to plan and reserve the financial resources so as not to compromise the ability to honor commitments to various segments of the target audience , such as employees and suppliers.
Before opting for a financing, it is interesting to check with the financial institution to renegotiate it. Depending on the cash flow , it is feasible to remove it faster or require more time to finalize the payment.
If you are completing the financing in a shorter period, consider reducing interest rates to have a larger discount on the installments. If a longer than expected time is required to complete the installments, try to negotiate so that the interest does not make payment impossible.
It is very important to seek a transparent negotiation with the financial institution before signing the contract. As the rules of the agreement are clear, the less likely it is that unpleasant situations will occur. In addition, the company will be more able to seek solutions to honor the benefits if there is any difficulty in attracting resources.
Tip: How to make the ideal loan and use it the best way in the company
How to get a loan for micro and small businesses?
It is not enough to plan, present a good idea, count on money and do a financial analysis of the company to get a financing. It is also crucial to follow certain procedures requested by financial institutions .
Therefore, the recommendation is to know the most requested actions for the release of credit . One of them is the presentation of the social contract, which proves the existence of the legal entity. This document presents data on the purpose of the organization, the products or services offered, the place of operation and the initial capital applied.
In micro and small business loans, it is relevant to show the balance sheet . In it, there is information about the economic and financial conjuncture of the corporation. In addition, data related to assets, revenues, expenses and possible debts are available.
A very requested procedure for companies, before borrowing money, is to present copies of the Corporate Income Tax Declaration (DIRPJ). This document must be sent annually to the Internal Revenue Service and must be presented in full to prove the fiscal regularity of the company .
Depending on the financial institution and the loan to be negotiated, other documents may be submitted. An example is the analytical balance sheet that covers data on cash flow and needs to be routed with the Statement of Earnings (DRE). This must be done within 120 days from the date of the credit application.
This set of measures of financial institutions has as main objective to verify if the companies are able to repay the loan. This is essential to combat defaults and prevent contractors from experiencing financial difficulties.
Being well informed about the documentation is essential to have an easier time getting credit and suffering less with paperwork. Losing a lot of time to resolve issues with a financial institution can disrupt the progress of the business because it will impair the ability to obtain working capital or delay the start of an important work for expansion.
Tip: All you need to know about rural credit
How to get the best loan conditions for my company?
As much as an entrepreneur knows how to offer high-quality products and services to clients, it is necessary to have an intelligent management of finances. In a scenario of economic instability, managing the budget responsibly is crucial to the survival of any business.
One of the reasons is that this posture contributes to borrowing on favorable terms of payment. It is not enough just to have a creative idea about how to use money to make the venture more interesting for the target audience . It is essential to verify the conditions of paying the installments of a loan.
This only becomes feasible with planning that tells how the organization can take the plots. It is also important to make simulations of how the installments will go before closing the contract. Thus, the company has more possibilities to analyze if it can pay the financing.
Another measure that allows a corporation to borrow on more favorable terms is to show to the financial institution that it has credibility with suppliers. The reputation of a good payer helps a lot to negotiate a lower interest rate, making it easier to settle the installments. This is great for getting working capital for micro and small businesses.
An entrepreneur can not afford to research the options available in the market to ask for a financing. There are credit unions that offer interest rates and payment terms that are more advantageous than most banks.
The ability to convince analysts of a financial institution that can honor the commitments is a good alternative to borrowing for micro and small businesses in a favorable situation. The faster you pay the installments, the greater the chances of getting the return on the investment in the short term.
Tip: Learn how to make your small business grow in a sustainable way
How not to fall into a priceless debt?
Imagine that the owner of a bakery has opted for a financing to buy a more modern oven. It is certainly an action aimed at increasing productivity and improving the quality of customer service .
On the other hand, this can become a serious problem for the company, if there is a care in checking how the payment of the benefits will interfere in the progress of the activities.
Delaying the discharge of one or more installments may trigger a financial crisis that will only be resolved with the manager showing a great bargaining power. The ideal is to adopt some procedures so that debt does not become priceless, such as:
analyze the financial situation before signing the contract. Thus, the company has more security in applying the money;
opt for loans that offer a good grace period to begin paying the installments;
to pay the installments according to the date stipulated in the contract, to avoid the incidence of even greater interest;
verify the possibility of renegotiating the debt, for the company and the financial institution to be satisfied with the business;
properly managing the company’s revenues, not confusing the resources of the corporation with those of the managers themselves;
maintain the peace of mind not to close a contract hasty, without evaluating other financing options.
It is also indicated to have a responsible attitude towards the expansion projects of a micro or small company. If possible, it is best to run it in stages. In this way, there will be fewer risks of seriously affecting the budget with expenses directed to a work or acquisition of various equipment.
Entrepreneurs can seek the help of credit union advisors and other financial institutions to understand the workings of the loans and the care they need to avoid getting involved with debts that will affect the continuity of the business.
How to evaluate the opportunities to make a loan?
It is natural that many entrepreneurs are worried about investing because of the fear of not properly planning the impact of a funding on the activities of the organization. With the lowest interest rates, there is less risk of not being able to pay the installments on the due dates.
Before looking for a financial institution , an entrepreneur must assess whether a loan can be considered an investment. By adopting this measure, he shows that he is aware of the importance of credit for the business to be more profitable and attract more customers in the short, medium and long term.
Another action that helps to get good results with a loan is to talk with business owners who have opted for this type of investment. Finding information about how financial institutions behave with customers increases the chances of choosing the most appropriate financing for the company’s financial reality.
In the case of family farming, entrepreneurs have several credit line options through the National Program for Strengthening Family Agriculture (PRONAF). Features can be used for various purposes, such as:
acquisition of inputs used in production;
purchase of equipment;
works for implantation, reform or expansion of a company;
investments in irrigation, drainage and land reclamation;
support to invest in technical assistance;
rural electrification and telephony projects;
recovery or renovation of machines used in rural activities.
It is essential to evaluate how a loan can help a company to stand out from the competition. Choosing a loan because it is simple to get credit is a serious mistake.