The professional and business loan brings together different types of credits, which allow each business to finance specific needs.
Leasing: The occupational lease is a rental. It can be rental of furniture, real estate or automobile. This allows the company to be able to take advantage of a property it has chosen without having to assume the purchase.
The Amortizable Loan: The professional depreciable credit is the most commonly used credit. The principal is repaid throughout the loan with interest and insurance. It allows the financing of all types of a professional project.
Factoring: The factoring is to entrust their invoices to a factor that will cover the bills now in place. This allows the company to have no cash shift since it is paid directly during invoicing.
Revolving Credit: Also called professional revolving credit, is a sum of money made available to the company by a lending institution. The company is free to use this amount in any way. This is a short-term solution when cash needs arise.
Cash Credit: The professional cash credit is a short-term credit, which allows the company to get the cash it needs for its operation.
The In-Fine loan: The professional fine loan consists of paying loan interest and insurance at each due date, but the capital is entirely due at the end of the contract. It presents especially for businesses, a tax advantage.
Basic Conditions for Obtaining a Loan
Once you have studied these types of business loans, you will move to apply for the one that suits you. There are several conditions that will be mandatory considered by bank employees and increase the chances of receiving money.
1. Detailed Business Plan
If you cannot imagine what it is, then it is unlikely that you should start your own business. A program in which the necessary funds, cost objectives, customer demand, timing and volume of expected profits are calculated are necessary for the entrepreneur himself. It is simply impossible to economically and financially substantiate the required amount without a well-written document.
Of course, there is the option of buying a ready-made business plan, but in this case, it is better to contact a company specializing in the implementation of such services. The business plan describes in detail what the money received in the bank will be spent on, how long it will take to pay off and what profit it will bring.
A correctly drawn up document can occupy dozens of pages; however, it is advisable for the bank to draw up a concise version in which the main provisions are discussed.
2. Availability of collateral
If you can provide a security deposit, the possibilities to get money from the bank are significantly increased. At the same time, the annual rate decreases, the period for which the loan is granted and the amount provided is increased.
However, the only property that can be quickly sold is liquid – taken as collateral. A loan may be secured by:
- Other liquid assets
- Real estate – apartment, house, land
- Transport – both automobile and any other
The availability of a guarantor makes it much easier to obtain a loan, which can be both a legal entity and an individual. If you have a sound business plan, you can submit it to centres of entrepreneurship or other government agencies that help start-up businesses. Under their guarantee, banks issue funds without any problems.
4. Credit History
The purity of the credit history is checked by all potential borrowers without exception. Even if the company is just starting its activity, the history of its owners and managers will be checked. A high credit rating is obtained if you:
- Loans taken earlier are closed in accordance with contractual obligations
- Sanctions were not applied due to delays
- There are no currently closed loan commitments
If the credit history has been damaged, it will need to be corrected. To do this, loans are taken in MFIs (in this case, long waiting times are not required), which are repaid during. It should be borne in mind that repayment earlier than the payment term specified in the contract does not become a positive factor – banks are interested in relations with the client for the time agreed in advance.
We can advise you to take the option of obtaining and repaying microloans to those who have no credit records – for the bank, and an empty credit history cannot say anything about the borrower.
5. Full package of Documentation
First of all, it will be necessary to study in detail the requirements of a particular bank (each of the institutions can put forward its conditions) and prepare the specified package of documents.
In addition, you can attach other, properly executed documentation. Mandatory availability of permits and licenses related to the type of activity for which the amount is taken.
The Procedure for Obtaining a Loan
The conditions and procedure for registration may vary depending on the requirements of the bank, the purpose of the loan, the ability to provide a pledge, the duration of the business and other circumstances.
For beginner businessmen, they are tougher, and the requirements for them are higher – the bank cannot be sure that the company will be able to work efficiently and make a profit.
Before applying for a loan, study as many offers as possible – they all have their own differences. It is quite possible to prepare several packages of documents and at the same time, contact not one, but different banks. This will take longer but will increase the likelihood of obtaining a loan.
A list of documents required to provide along with an application for a loan can be found on the official websites of banks. In addition to the standard package, in each case, bank employees may request additional information.
After the Submission
After the submission of these materials and statements, you will have to wait for the results of their consideration. This period depends on the amount of the requested amount and lasts at least three days, while the maximum time is not negotiated.
In the process, the bank can put forward additional requirements, and its employees can go out to inspect the collateral property or the office of the company, send various requests, and if the required amount is large, even arrange an audit. If approval is received, an agreement is concluded between the borrower and the bank, which sets out the main and additional financing conditions.
Its employees can go to inspect the collateral property or the office of the company, send various inquiries, and if the required amount is large, even arrange an audit. If approval is received, an agreement is concluded between the borrower and the bank, which sets out the main and additional financing conditions.
Its employees can go to inspect the collateral property or the office of the company, send various inquiries, and if the required amount is large, even arrange an audit. Learn more about how to apply for a business loan.
This guide will help you learn all the important things you need to know about the various types of business loans that you can go for. We have also shared the procedure of how to obtain a business loan for you to follow.