Tips for the self-employed when applying for credit

GERMANY. Self-employment is one of the great goals in life for many people. Being able to work independently and freely, being one's own boss, determining where things go – all this sounds very tempting at first glance. But this is also associated with enormous challenges. Because being self-employed doesn't just mean being good at the business you're in, it also means keeping an eye on accounting and finances. Certainly, various activities should be outsourced to tax consultants. But the capital procurement lies in any case in the own area of responsibility. While employees with a fixed monthly income can obtain loans relatively easily, the self-employed often have to overcome numerous hurdles to get approved for the loans that an average employee is granted online in a matter of minutes.

Banks need planning certainty

The reasons why banks find it easier to grant a loan to an employee than to a self-employed person are obvious. Banks want to be sure of getting their money back. A steady income in a permanent job is a strong indication that the client can meet his or her obligations. But this is not something a self-employed person can serve. Depending on the industry, the income situation of self-employed people can vary greatly. However, fluctuating, uncertain figures make it difficult to plan with certainty. Therefore, it is particularly difficult for tradesmen whose business has not been running for long or even start-ups. For these can not even score with meaningful business figures from the past. When taking out a loan, self-employed people should ensure that the figures available are as up-to-date and meaningful as possible, so that the bank can get a reasonable overview.

Good preparation as the key to success

The more relevant and up-to-date the documents brought to the appointment, the higher the probability of receiving a positive decision. The most important documents are the income tax assessment notices for the last three years, a current BWA (business analysis), and a profit and loss account. For start-ups, a mature business plan is essential. A negative Schufa information almost always leads to a rejection. Therefore, it is important to take a look at the Schufa in advance, in order to have possible false entries deleted in time. A flawless Schufa is a basic prerequisite for granting a loan.

Collateral increases the chances of getting a loan

If you can offer the bank collateral for a granted loan, you increase your chances strongly. Because in the event of payment difficulties, the bank can seek to realize the collateral and therefore suffers no loss. As collateral can be either own, unencumbered real estate or assets from building savings contracts or life insurance policies. Alternatively, a guarantor can be brought in to agree to pay the borrower's debts in the event of a default.

Personal appearance can be decisive

Bank employees are people, too. Therefore, they not only take a close look at the prospective borrower's finances, but are also influenced by the applicant's personal appearance. It is therefore important to make a good impression. A confident appearance also includes being able to explain conclusively both the reasons for the financial requirement and to ensure repayment through the expected (additional) revenues. Those who feel insufficiently equipped rhetorically or professionally should consider bringing their tax advisor to the bank appointment. This looks professional, forward-looking and increases the chances of getting the credit you are seeking.

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