Many banks attach great importance to a secure and regularly recurring income when lending. For this reason, an installment loan for traders is usually much more difficult to obtain than an installment loan for employees. This applies to both an installment loan that is used exclusively for commercial purposes and an installment loan that is used exclusively for private purposes.
Those who want to receive an installment loan for traders often have to provide completely different and, in addition, significantly more extensive collateral than is the case with employees, workers or civil servants.
Short-term installment loans
A short-term installment loan for traders usually only has a term of up to 90 days and is only used to bridge temporary financial bottlenecks and to maintain ongoing business operations. In certain circumstances, it could also prove advantageous to take out such a short-term installment loan from a private person among friends or acquaintances. Here the repayment modalities can be individually regulated. Another way of bridging short-term financial bottlenecks would be to use the overdraft facility on the checking account or the overdraft facility on the business account.
Medium and long term installment loans
If the trader needs an installment loan with a term of several years, the bank will carry out a comprehensive credit check. In this case, there is only a realistic chance of lending if the Credit Bureau information is in order and if the business has been successfully established on the market for several years. Appropriate evidence must be provided for this. This could be done, for example, in the form of bank statements from the past three months, income tax returns from previous years and business accounting. In the case of freelancers, the income statement or the income surplus account could alternatively be requested.
A installment loan for traders must be repaid in equal monthly installments. This must be guaranteed despite the irregular and sometimes significantly fluctuating monthly income. Every trader should therefore seriously consider whether they really are able to pay the installments even if the orders are temporarily absent, customers do not pay or other unforeseen events occur. If the trader fails to meet his payment obligations, this can have serious consequences, which can lead to the termination of the loan agreement. This should definitely be avoided. Otherwise, it will no longer be possible to obtain an installment loan for traders in the future, even if operational investments are urgently needed.
In order to increase security, it could also make sense to look for a financially sound guarantor for the loan. Ideally, this should be a person who is not self-employed but is employed and has a secure job.