Getting a loan for the development of small business in our country is not easy. Credit institutions are wary of issuing loans to small businesses. According to statistics, only one application out of three can be expected to respond positively. As for the issue of large sums, the picture here is even worse. Only 8% of the number of approved loans falls on loans of large amounts. This situation hinders the development of small business in the country and requires a solution.

  • Getting credit for small businesses is problematic in every corner of the country. An unstable economic situation is the main reason for the refusal. Making a consumer loan is not a way out of this situation, as it is unlikely to be enough for doing business.

It is important for an entrepreneur to obtain credit from a credit institution. Financial reliability and solvency are the main factors affecting the decision to grant a loan to small businesses. The banking organization needs to prove that the activity is carried out regularly and there are no prerequisites for its curtailment. Any credit institution only trusts information that has been documented, so it is worth preparing documentation on monthly business expenses. The use of the factoring invoices is now rising up gradually.

What are the programs for small business lending?

For small businesses, a whole range of programs has been developed that meet a variety of objectives – from covering cash gaps to acquiring equipment, office and storage facilities or special equipment. Each bank proposal is selected individually for a specific case. The most common credit programs are:

  • leasing with the right to repurchase in the long term;
  • overdraft – crediting of a businessman for a sum greater than his balance on the current account;
  • factoring;
  • Financing of business when providing a business plan and clearly justifying its profitability.

Almost all programs for small businesses are of a targeted nature. They are designed to promote the development of activities, the expansion of production, the release of new products, etc. It should be remembered that the credit institution monitors the expenditure of each ruble of loan funds. Any use of borrowed money for personal purposes that do not correspond to those stated in the business plan leads to imposition of penalties and the entry of a businessman in the black list.


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