According to German law, a small business owner always counts when an annual income of currently 17,500 USD is not exceeded. A small entrepreneur registered in Germany does not have to pay sales tax or pay input tax. Since the small business owner has a relatively low income with his small business, at least compared to companies, he is often dependent on cheap loans for investments.
Small business loan
The loan for a small business owner is not necessarily easy to obtain, because the fact that the income is relatively low also lowers the credit rating. In addition, a small business owner is always self-employed, which means that in theory, but also in practice, he can lose his income from one month to the next. This could happen, for example, if orders are missed or a bad investment is made.
As a result, banks always view small business owners as a little more critical, because they simply cannot have the usual security like a normal employee. This has a regular income in a fixed amount and also, at least in the case of permanent employment, a valid protection against dismissal. This enables the bank to calculate the available collateral better and set the credit line higher. Nevertheless, a loan for small businesses, especially if it is a micro or small loan, is of course not automatically a rejection.
Find the right bank
As a small business owner, you should be able to think and act economically, as this is also required in the daily work and management of your own small business. Consequently, the loan should also be chosen so that the lowest possible costs are incurred at ideal conditions. The costs are significantly increased by possible fees for the loan, for example the processing fee, whereby the biggest factor is of course the estimated interest rate.
A good loan for a small business owner should ideally not cost unnecessary fees and at the same time have a low interest rate. Small businesses can find such a loan according to their own ideas with the help of a loan calculator, which, after a few seconds, issues the cheapest direct bank for the amount of the estimated loan and the desired term.
When applying for the loan, it can be advantageous if the borrower and small business owner has been running his small business for some time. This enables the bank to recognize that the person concerned is performing this activity successfully and with the necessary foresight to repay a loan with a longer term. Attachable assets also make sense if a larger loan is used. Real estate and cars are popular as attachable capital to increase the credit line.