Credit for small business development.

weak business development is a consequence of not only administrative and regulatory policy in this sphere, but also the problem of access to loans.The fact is that even before the crisis, loans for small business development was not among the priorities of banking products.

Key Issues lending

The main problem of this attitude is the opaque structure of the business.The primitive level of financial literacy is a businessman for banks useless, and often risky factor.Even companies with stable financial transparency of the activity is not always possible to take a loan for the development of small business.What to say about the absence of the ability of an entrepreneur to make basic financial and accounting reports for the bank.Another problem is a small percentage of equity in the statutory fund.It is very difficult to get credit for the development of small business on the balance sheet if the company is only 5 - 15% of its own finances, and the rest - borrowed funds.Any error in business manageme

nt can result in bankruptcy.For the stable development of the company requires a minimum of 30% equity investment.In addition, the bank provided a loan for the development of small businesses need to have a business plan, which specifies all the stages of development of the enterprise.But in this case, the financial literacy of entrepreneurs is poor.

How to get

Before you give credit for small business development, Sberbank, VTB or other lending institution would require mandatory provision of guarantees for its return.Debt repayment is made by the profits of the enterprise, while not withdrawing money from circulation.Hence, the resulting revenue should be considerably higher interest rates, so to get the loan you need to be realistic about your business opportunities.In addition to high levels of income, the applicant must present a security for the loan.As such collateral banks accept collateral that is liquid and must be comparable to the amount requested.A prerequisite for issuing the loan is to have an insurance policy not only on bail and profitable assets, but also on the life of the owner of the enterprise.The credit for the development of small businesses will require guarantors of the number of business partners, entities or individuals, as well as key figures in the business.This support shows the reliability and reputation of the applicant.In addition to a full package of documents, the bank may ask for the right to reach an agreement on write-off of its available cash resources, if there are violations of loan conditions by the borrower.The next stage of the loan will be vetting the borrower.And only after that decision is made by the security service, either "yes" or "no."The third embodiment can not be.What motivates employees of the bank, disclosing such an outcome - confidential information.All the more reason for refusal is never communicated to the client.This is a common policy of all banks.