Every new business needs liquidity to facilitate its first steps in the market arena and even more so in the post-Covid era. But the process of getting a loan for a new business is not a simple matter.
You must know the options you have and know how you will benefit, depending on the bank you will turn to. We are here for you, to help you find the right loan for opening your company, whether it is big or small.
What options do you have to get a loan for a new business?
1. Traditional bank lending
When you visit a bank branch to request financing, you should keep the following in mind:
📌 There is no "manual". Each case is unique, which means that you cannot rely on specific steps to get a loan for a new business.
📌 It is most likely that they will ask you for important guarantees from your personal property, such as e.g. the pre-notification of a property that is in your name. An alternative is to put a guarantor who meets the criteria.
📌 You should explain your business plan to them in detail and provide all the information they will ask for.
2. Microcredits without guarantees
Microcredits also provide a solution for new businesses. These are microfinances of up to 25,000 euros which are given without collateral.
Microcredits are starting to enter the Greek reality and specialized companies will soon start operating and will receive the relevant license from the Bank of Greece. It is estimated that approximately 150 million euros will be given annually.
If you are starting a small company, you may not need a loan with large financing. Thus, microcredits can give your business a first injection of liquidity.
What modern options are there today for start-ups?
In addition to traditional loans for start-ups, today you have other options that are worth knowing about.
💡 Eurobank – AFI collaboration
Eurobank works with the non-profit organization, Action Finance Initiative (AFI), which is a European leader in microcredit. The aim is to provide microcredit to existing and new businesses, while supporting self-employment.
The guarantee for microcredits is provided by the European Union within the framework of the program for employment and social innovation EaSI.
Small businesses that do not have access to bank loans, long-term unemployed and vulnerable categories of citizens can secure financing of up to 12,500 euros.
AFI to undertake pre-selection, training and mentoring of candidates. Eurobank undertakes credit control and financing.
Funding is provided for:
- Working capital (purchase of raw materials, payment of payroll and rent, etc.).
- Funds for the purchase of equipment, the acquisition or repair of business premises and other fixed investments .
- Funds for the purchase of software and other investments in intangible assets.
💡 microSTARS
The Center for Business and Cultural Development implemented in 2015-16 the microSTARS project, which concerns the provision of microloans and business development services for small and very small, existing and new businesses, with a focus on Central Macedonia.
Through the microSTARS platform you can secure a loan for a new business, as long as it operates for at least 6 months. The microloans range from 1,000 to 25,000 euros, have a repayment period of 5 years and are granted by the Cooperative Bank of Karditsa and the Cooperative Bank of Pancrea.
- Ratings are based on financial data and qualitative characteristics of the borrower, such as character, abilities, personal commitment, integrity and experience.
- It examines whether the business plan is realistic.
- The interest rate ranges between 6%-8%.
- No collateral is required, but a guarantor is required.
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What guarantee do banks ask for before giving a loan for a new business?
The prevailing perception in Greek reality is that in order to get a loan for a new business you have to prove to the bank that you "don't need it".
For a business that is just starting out, this means that it has to show... the color of money, either through pre-notification of personal property, or through deposits, when it is not quite up and running.
But think about it this way: Would you lend money to a new business when uncertainty is looming? Wouldn't you want to first get the required guarantees that you won't lose your money if things go wrong?
Wouldn't you also like to be convinced that this is a serious endeavor with excellent prospects? This is the perspective from the banks' point of view.
There are solutions on the market and banks do not rule out requests completely. They give a loan for a new business, as long as the banking criteria are met, the required guarantees are given and a good business plan is presented.
Now you know what your options are for getting a loan for a new business! Do you want to compare loans and choose the one that best suits your needs? Enter our platform, compare and find what your company needs in its first steps!
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