Borrowing for traders can relate both to a loan required for the business and to a payday loan required by the entrepreneur. It makes sense for a trader to separate the two types of credit from one another and thus not to jeopardize the tax deductibility of operational interest rates.
With regard to the documents to be provided, banks also differentiate whether they grant a loan to traders as a business loan or as a payday loan. From a legal point of view, a trader is also considered a private customer when borrowing for private life.
Private loans for traders
When taking out a loan for private purposes, a trader should be treated like any private bank customer. In fact, direct banks in particular often discriminate against self-employed people by only lending to employees. The main reason they give is that traders have an irregular income and have discretion when calculating their income. However, this limited scope only allows income to be shifted to the following year in a few individual cases.
In contrast to most direct banks, savings banks, cooperative banks and large private banks generally grant a loan to traders for private purposes. They mostly accept the tax assessment as proof of income, whereby some banks require the corresponding proof for the last two to three years.
A comparison of costs is a matter of course for traders, so that they obtain several offers and decide on the cheapest loan. As income fluctuations are common throughout the year for the self-employed, as a precautionary measure, traders opt for a long credit period with correspondingly low monthly installments. Ideally, the loan you take out allows you to make free repayments so that traders can pay off their payday loan earlier than planned, while maintaining good earnings.
Business loans for traders
When a business loan is initiated, the bank is primarily interested in the company’s key figures and the extent to which the investment to be financed will increase sales and profits. The entrepreneur provides the bank with realistic calculations and thus proves that he can repay the operational loan applied for as agreed. In the case of a business-related loan for traders, it is customary to agree on a repayment that does not start immediately, since most investments only lead to profits after a certain start-up period.
The negotiation takes place with the bank’s business customer department, whereby in addition to large private banks, and Good credit company are particularly suitable as financing partners. Good credit company and cooperative banks are the ideal contacts, especially for small and medium-sized companies, because according to their statutes they are obliged to promote the economy of their catchment area.
Borrowing a business is easier than for existing companies, since in this case best bank grants subsidized promotional loans with the exception of a few industries. A further possibility of obtaining a loan for business people to start up their own business is provided by state guarantees, the conditions for which differ greatly between the individual federal states.