Do you need financial resources for your business activity? The solution may be a business loan. This is a special type of banking product that is granted on slightly different terms than standard cash loans. What exactly characterizes it and in what situations can you apply for it? Learn the rules for granting a loan to a company.
A loan for a business may have different requirements when it is applied for by an enterprise than when it is applied for by a private person. Check what you need to know if you want to raise funds for your business.
What is a business loan?
A business loan is a banking offer intended strictly for entrepreneurs. To use it, you must have a registered business. Usually, banks set certain requirements as to the time of their functioning on the market. They are reluctant to grant loans to companies that have only recently been established.
Entrepreneurs can take advantage of various loan offers, including working capital loans, revolving loans in a company account, or investment loans. Entrepreneurs can often count on more attractive loan terms than private individuals, most often they are associated with a long repayment period. This is largely due to the security of their financial obligations.
Business loan – how is it different from other loans?
It will not be a surprise that to receive a loan for a company, you must already be in business. It is not possible to receive a loan if the company has not yet been registered. It is therefore a fundamental difference. Moreover, in the case of consumer loans intended for private individuals, the main requirements are to have creditworthiness.
The formalities related to a business loan will be much more complex. Most often, the bank requires the entrepreneur to submit a business plan. This is true for new businesses. On its basis, it estimates whether the company has a chance to survive on the market. It may also be necessary to provide data on the financial condition of the enterprise – this is a requirement that also applies to companies with long experience.
What conditions must be met to apply for a company loan?
If you want to apply for a company loan, you need to prepare properly first. How to get a loan for a company? First of all, it is necessary to have creditworthiness and a good history at the bank. Another requirement is to secure financing. If you are applying for a loan for a limited liability company, the consent of all members of the management board will also be required.
Importantly, it may turn out that the bank will not provide financial support to your company because it has been on the market for too short a time. Banks most willingly grant corporate loans to enterprises that operate on the mime market. 1-2 years, although you can find offers for companies with 6 months of experience.
What are the other credit conditions for a company? They may concern, among others the need to present a business plan or provide company accounts.
What can a company loan be used for?
If you choose an investment loan, then, as the name suggests, for the funds raised, you will have to make investments. It is up to you what kind they will be. This may be, for example, the purchase of computers for the office or the purchase of a real estate for company purposes. The investment loan is intended to finance the development and increase the value of the company’s fixed assets.
Working credit is another choice. You can use the funds obtained from it for the current needs of the company. Another solution is a revolving loan on a business account that will help you avoid the negative effects of losing financial liquidity.
So, as you can see, the funds obtained from the loan for the company can be used for any purpose. You just need to choose the right type.
How to get a loan for a company – the necessary documents
To be able to apply for a business loan, you need to complete the necessary documents, and there are quite a few of them. What are these? First of all, you should provide the bank with information about your business. Therefore, you will need a certificate of entry in the Central Register and Information on Economic Activity, as well as the assignment of the Tax Identification Number (NIP) and REGON. If you run a company, you replace such documents with a certificate from the National Court Register.
Rules for granting a loan for a company
Few banks decide to grant loans to companies from the very first day of their operation. Usually, a certain period of existence on the market is required. Most banks, therefore, require at least 12 months to be in the market. Because banks do not most often have preferences regarding the legal and tax forms of the company applying for funding, each client is treated individually. Nevertheless, the basis is an examination of his creditworthiness, which in the case of companies may require the submission of numerous documents. The specific rules also depend on the type of loan the entrepreneur decides.
Business loan – what else is worth knowing?
Few people realize that it is possible to get a mortgage on a company. Unfortunately, if you run a business, in the eyes of the bank, granting you such a loan is much riskier than in the case of a full-time employee. Nevertheless, you still have a chance. It remains to dispel one more doubt: a loan for a company or privately –