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Financing
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Most entrepreneurs raise start-up funding from their bank. What does banks require to lend you money to finance your business start-up?
Make a business plan
The best tool to obtain the necessary financing is a detailed business plan.
..and budgets
Based on your personal, establishing, and operating budgets you can make a cash budget or have your banker work it out for you. A cash budget shows your expected borrowing requirement in exact figures.
Borrowing requirement
Present your business plan and borrowing requirement to your banker and discuss the future cooperation between the bank and your company.
You are being evaluated
To grant your company a loan the bank will evaluate:
- Your background and personality in relation to your commercial concept
- Your mission, motives, strategy and contemplated business format
- Your selling scheme and marketing plan
- Budgets and borrowing requirement
No Guarantees
However, many entrepreneurs are granted credit and/or a loan for the business start-up without much preparation let alone a business plan.
It is impossible to say why entrepreneurs are treated differently from bank to bank, from account officer to account officer.
One of the most common reasons is that those who are able to provide security (property, savings, real estate, etc.) are treated better as the bank in such cases incurs a lesser risk granting the entrepreneur credit.
Another reason could be “chemistry” and confidence between the entrepreneur and the account officer or simply the fact that you, as a personal customer always have kept your agreements with the bank concerning your personal finances, thus demonstrating reliability to the banker.
Small Amounts
If your have modest borrowing requirements for the start-up, say 30-40,000 Dkr., then a business plan is not decisive. In such cases focus is on your person. Still, it is a good idea to make a business plan as you presumably want to grow with your business and eventually may need additional financing from your banker.
If you want to signal professionalism from day one and you expect your banker to be a serious adviser and sparring partner it is strongly recommended that you make a business plan - and make sure to establish a fiduciary relationship to your banker.
Andersen
- Forretningsplanen
- Budgetter ved virksomhedsstart
- Mere om finansiering
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