Poland has a reasonably developed economy and is encouraging to enter the business from the world of consumers. If a business loan is on your current to-do list, there are several possible pitfalls to avoid.
These various errors can lead to such situations:
- You will pay more than you have to.
- You get stuck in a loan you don’t need at all.
- You can’t get funds when you need them.
Some possible errors when applying for a business loan include:
1. Not using advice
The way you build company finances can have a huge impact on total costs, especially when it comes to potential tax savings. Getting professional advice from the very beginning will help you choose the most suitable choice for your business.
2. Lack of preparation
When you apply for a loan, you must provide basic information about your business. Lenders will usually want to see financial records, cash flow projections, a detailed business plan, and justification for the loan. Failure to prepare these documents can lead to costly delays in processing or even to the rejection of the application.
3. Time mismatch with the need
An important principle of business financing is: matching the loan term to the target. Incompatibility can cost you dearly and leave you without the flexibility you need. As an example, you might want:
long-term finance for large purchases, such as real estate
satisfying short-term needs, such as increasing working capital during periods of seasonal fluctuations, or, such as overdraft.
4. Choosing the wrong type of financing
There are many different types of business financing, from simple secured loans to specialized funds for specific industries or business models. Each type has different pros and cons, so look around to find the most suitable option for your purpose.
5. Applying for a loan from an unprofitable lender
Approaching the wrong lender can lead to rejection of the application, lost time and even an error on your creditworthiness. Every lender has an appetite for different types of business, so it’s important to find one that works with companies like yours.
6. You take more than you need
The process of applying for a bank loan can sometimes seem slow and cumbersome, so it can be tempting to go directly to another lender. But if you meet the criteria of banks and there is no urgent need for funds, impatience can be a dear mistake.
7. Underestimation of costs
Each loan involves costs ranging from configuration and unloading fees to normal administration fees. Make sure you understand everything you pay – especially if these fees are added to your loan balance (you’ll also pay interest). It is also worth getting acquainted with the loan comparison website.