According to CB Insights, 29% of emerging companies fail because they run out of money, which is why the consulting firm Trust Corporate provides details to avoid making mistakes and obtaining a bank loan.
Entrepreneurs often seek financing to materialize, consolidate or grow a certain project, and on various occasions they make mistakes that could be avoided. The consulting firm Trust Corporate provides details on the most frequent mistakes that entrepreneurs have when requesting financing.
According to data from CB Insights, 29% of emerging companies fail because they run out of money, so when a startup needs monetary help, it should resort to applying for a loan, and once it is granted, manage it properly.
Here are the 5 most common mistakes that entrepreneurs make when applying for a bank loan:
- Get advice: The entrepreneur must know and be aware of the requirements that will be requested in a certain entity at the time of requesting a loan. If there is confusion in the process, it is best to ask for advice from someone who is really knowledgeable in the matter. “Those who start a project do not have to know everything, so it is advisable to seek help whenever it is needed. An advisor can guide and simplify processes, making the work easier for the entrepreneur”, adds James Hernández.
- Look for options: It should be taken into account that a bank can grant a loan under conditions that result in a much higher opportunity cost than another institution. It must be clear that there can always be a better option. "It is important to select the option that best suits the needs of the entrepreneur and look for the most appropriate institution for the project. "
- Formulate the request: The first impression made by the bank of an enterprise is the information that is delivered in the request for the file, which must be clear, precise and complete to pass the filter of the institution. “If a good request for the file is not made, the chances that the credit will not be granted increase. The form that is delivered must call the attention of the bank, containing a description about the project, and why and for what the loan is going to be requested”, details the Trust Corporate executive.
- Type of credit: When the entrepreneur decides to apply for a loan, it is recommended to see what options the market offers and choose the one that best suits the business activity. "There are different types of credits for entrepreneurs, agricultural, tourism, focused on women, and so on. You have to choose the option that most satisfies the entrepreneur and avoid making mistakes such as requesting a commercial loan for an agricultural activity”.
- Credit conditions: All credits have different conditions which the entrepreneur must know. “The person requesting the loan must have a full understanding of the conditions set by the bank, such as the interest rate, the return period, the mechanisms and means of payment, etc.
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