Business loans: how to prepare before you apply

Planned well, a business loan is a powerful tool for growth: new equipment, more stock, seasonal working capital or a second outlet. Taken without a plan, it can squeeze your cash flow. A few simple steps before you apply will help you get a decision faster and choose terms that genuinely suit you.

1. Be clear about the purpose

“I need money for the business” isn’t enough. Write down what you will buy with the loan and how it will affect revenue. For example:

• working capital: buying stock ahead of the season;
• fixed assets: equipment, vehicles, refurbishment;
• expansion: a new outlet or production space.

A clear purpose makes it easier to choose the amount and term. Working-capital loans tend to be shorter; equipment loans longer.

2. Check affordability

Look at income and expenses for the last 6–12 months. The monthly payment should stay within a comfortable share of free cash flow. For seasonal businesses, plan around the weakest months.

Example: a business loan of AZN 30,000 over 36 months at 28% a year gives an annuity payment of about AZN 1,240.91 a month. Total interest is AZN 14,672.67. Over 24 months the payment rises but total interest falls. Try different options in the calculator.

3. Prepare documents in advance

Your ID card details are enough to apply online. When the loan is arranged, however, additional business documents may be needed — a specialist will give you the exact list on the phone. These usually help:

• registration documents confirming the business;
• figures showing recent income and expenses;
• a lease agreement or ownership documents;
• repayment schedules for any other loans.

Having documents ready speeds things up considerably.

4. Check your credit history

Your credit history shows a lender your payment discipline. If earlier loans were repaid on time, that helps your application. If you have open arrears, try to clear them before applying.

5. Choose the terms

Key terms of the Finex Kredit business loan:

• amount: AZN 100 to AZN 100,000;
• term: 12–36 months;
• annual rate: 28–40%;
• commission: 1–3%;
• age: 22–60;
• repayment: annuity.

When comparing loans, look at the effective annual rate (FİFD), which includes commission, rather than the headline rate.

6. What affects the final rate

The final rate is set after your application is reviewed. In general it may depend on:

• the loan amount and term;
• how long the business has been trading and how stable its income is;
• credit history;
• the security offered.

7. Apply

1. 1Fill in the “Apply online” form and choose the business loan.
2. 2Select the amount, term and rate in the calculator.
3. 3Enter your personal details and submit.
4. 4A specialist will call within 24 hours to confirm terms and documents.
5. 5The agreement is signed at a branch and funds are issued on the agreed terms.

You can check your application at any time on the “My application” page using your reference number and phone.

Small but important tips

• Borrow only what you need — extra money means extra interest.
• Choose a payment date close to when revenue comes in.
• Keep a reserve of at least one monthly payment.
• Be realistic about when the asset you buy will start earning.

Working-capital loan or investment loan

When planning a business loan, it helps to split the purpose into two groups. A working-capital loan pays for stock, raw materials and day-to-day costs: the money turns over quickly and the loan is usually repaid from sales, so a shorter term makes sense. An investment loan pays for equipment, refurbishment or a new outlet: the asset earns over a longer period, so the term should match how quickly the asset starts paying for itself.

A simple financial plan

A non-bank lender may not ask for a full business plan, but a simple one for yourself makes the decision easier. On a single page, write down:

• the loan amount and what it will be spent on;
• the extra monthly income you expect;
• the monthly loan payment;
• how you would pay in a worst-case scenario.

Frequently asked questions

Do I need to be a registered company? A specialist will confirm the application terms for your type of business.

Can I repay part of the loan early? Early repayment reduces interest; check the terms before signing.

Finex Kredit has served small and medium businesses since 2013. Specialists at our Baku head office and regional branches will help you choose the right option.