Self-employed people do not get a loan from banks easily anyway, but if they do, they pay relatively high interest rates for it. There are three ways to improve terms: Prospects should conduct a rigorous comparison of providers, offer collateral, and ideally provide a guarantor. These options can also be combined.
Basic requirements for a loan for self-employed persons
Some basic requirements must be met so that the bank is at all willing to approve the loan:
- The prospective customer should have been operating their business for some time – ideally as long as possible. But two to three years are a minimum requirement for many banks. Founders to whom this does not apply are best advised to apply for a development loan, for which special conditions apply.
- The development of the last years must have led provably to a sufficient profit.
- There must be no negative Schufa entry.
- All documents required by the bank must be absolutely complete and correct.
Once these conditions are met, it is necessary to look for the best conditions. Let us now check the above possibilities.
Banks have different business policies. Some of them do not grant loans to self-employed people in principle or only for very specific purposes that minimize the risk of default – for example, for real estate, motor vehicle or equipment financing, which can include the solar system on the roof. However, they do not grant a simple working capital loan for expansion or a consumer loan to the self-employed. Other banks are generally willing to do this, but internally set the interest rate conditions for this. These depend on the individual conditions of an applicant. Self-employed persons should therefore request an offer from the banks with their data – loan request and justification, business model, duration of self-employment, income and family circumstances. The interest rate conditions will differ from case to case.
Good collateral is a good mortgageable property or capital-forming life insurance and, of course, a well-filled bank account (however, the self-employed person then does not need a loan). For a small loan a slightly better car may suffice. Valuables, jewelry, antiques, precious metals, etc. The banks do not like collateral, as it is too difficult to realise.
The guarantee is an excellent way to improve the conditions of the self-employed loan. Ideally, the applicant is married or lives in a (registered, in any case resilient) civil partnership with a person who has a secure and good income and is a guarantor. It can also be a parent or sibling or a partner. deal with an adult child. If collateral is added and the bank is generally prepared to grant loans to self-employed persons at favorable conditions, these can turn out really well for the applicant. Both sides must think carefully about a guarantee (borrower and guarantor). It is recorded in the guarantor's Schufa as if he had taken out his own loan and thus lowers the Schufa score somewhat. The guarantor is therefore limited in his ability to borrow until the loan he is guaranteeing has been repaid. Apart from that, it means of course that in case of emergency he has to answer for the credit of the self-employed person. Guarantees can be structured as follows:
- With a deficiency guarantee, the guarantor only has to step in when the borrower is proven to be insolvent. Even a foreclosure remained unsuccessful.
- In the case of the directly enforceable guarantee, the guarantor already pays at the first installment default of the borrower, whereby the bank must legally prove the guarantee if necessary. Banks love this form and reward it with more favorable interest rates. The guarantor must know what to expect. If the borrower does not have a particularly good payment record, the guarantor must think carefully about his willingness to do so – otherwise he will end up paying every second or third installment of the loan. This is likely to severely strain the relationship between the borrower and his guarantor.
- The guarantee on first demand is also a directly enforceable guarantee, but it grants the bank even further powers – it no longer has to legally prove the guarantee, but can get its money from the guarantor immediately. Should this have been wrongly named, he must get his money back. This variant is apparently very advantageous for the bank, but it is also fraught with uncertainties, which is why the directly enforceable guarantee is usually preferred.
- In the case of a (rare) global guarantee, the guarantor is liable for all of a borrower's liabilities to a specific bank. If a loan is already running and the bank extends the credit line, the guarantor is also liable for this – a very risky option for the guarantor.
A coupling of the possibilities mentioned leads to demonstrably better interest conditions with the credit for independent ones. Effort is required for this, but it can be very worthwhile.