Corporate loans inform, compare and apply here
Applications of corporate loans
The term corporate loan is not defined by law and is also known under other names, such as corporate credit, business credit or business credit. It refers, especially in comparison to a private loan, exclusively to the financing of a company and can be claimed by both companies and self-employed persons.
Why a corporate loan
A corporate loan is used to finance business-related investments. The application possibilities here are very diverse and range from the founding of a company to the financing of operating resources. Corresponding loans are not only granted in the case of financial bottlenecks, but also on fundamentally positive balance sheets.
Often there are high costs in between, which can not be handled alone for a temporary period. The most common ways to use a company loan include, for example, the purchase of high-priced production machines or vehicles, the purchase of an extension building with a good order situation or the financing of employee salaries.
The target group for a corporate loan
The corporate loan is intended primarily for the self-employed, entrepreneurs and entrepreneurs. For founders, for example, loans are usually essential for financing a start-up. As a rule, everything has to be fundamentally equipped, from the furnishings to the technology. Even occasional order situations with high material or personnel costs mean that already established companies have a short-term financing need. Who concludes a corporate loan, must be a so-called legal and natural person. These include, among others, limited liability companies (GmbH) or public limited companies (AG).
Without business plan no corporate loan
The target group of start-up entrepreneurs must make it plausible when applying for a company loan that their business idea is promising. To illustrate this, a business plan is created. It informs about the company founders and their professional background (including expertise, certificates and related documents).
The plan continues to accurately describe the supply and the market and the target audience for whom a product or service is intended. In addition, information about the financing concept, the planned marketing and the employees to be recruited are required. Also, a risk analysis is helpful and not least an indication of the proposed company form.
The financing concept
The financing plan is considered the heart of every business plan. It describes in detail the amount of own capital (own funds) for the establishment of the company already existing and how high the total costs including all ancillary costs are expected to be. In addition to this, the required outside capital must be named. For this purpose, not only the indication of the corresponding sum is required, but also an exact breakdown of the individual items for which the money is to be available. A financing plan is basically created voluntarily and serves the transparency in the application for a company loan.
Short and long term corporate loans
A company loan is essentially determined by its duration. Short-term loans are usually suitable for a quick capital supply and are usually associated with a short term. They are needed to bridge imminent defaults or, for example, to pre-finance materials. The repayment is usually made via company receipts. Long-term loans, on the other hand, are granted as so-called investment loans. Here is a long fixed interest rate and the repayment is made by monthly installments.
Interest rate and fixed interest rate for a company loan
In a credit decision, the associated interest rate is one of the most important points. The APR is the relevant quantity, especially for a credit comparison. The calculation is based on the nominal interest, whereby the respective regulations of the repayment are to be considered.
Only long-term corporate loans are relevant for the period of fixed interest. Here a renegotiation of the interest rate can occur after a certain time. When concluding the loan in periods of low interest rates, it may be worthwhile to set the longest possible interest rate period.
The repayment plan
The repayment of a corporate loan should fit the reason for the loan and the associated business needs. If necessary, periods of repayment are to be integrated or the possibility of unscheduled repayments. Even a complete premature eradication may be desirable, such as in a particularly positive company development. It should be noted that many banks require a prepayment penalty in this case.
Requirements for the borrower
In order to grant a company loan, the creditworthiness of the applicant must be checked by the lender. While this is usually done with consumer loans by a credit bureau information, the information is to be taught by the entrepreneur himself. For this, banks usually require various documents, including excerpts from the commercial register, tax assessments, balance sheets and account statements. Without a complete disclosure of the financial situation, a loan application to a reputable lender will not be successful.
Corporate credit and credit rating or creditworthiness
Whether an applicant receives the desired corporate loan depends on their creditworthiness or the creditworthiness of the company. A license depends on the result of the bank’s own scoring system. Credit scoring is used to determine a statistically based probability of successful loan repayment. The rating is not only suitable for the credit decision itself, but also for determining the associated interest rates.
Required collateral for a corporate loan
The lender is entitled to demand certain collateral when granting a company loan. On the one hand, collateral (guarantors) and, on the other hand, collateral (tangible assets) are customary for a loan. Guarantors are in most cases not accepted for corporate loans. In terms of real assets, there are very different options, ranging from real estate, through land to life insurance. The deposit of physical security affects the credit conditions. Here, different options are conceivable, for example in the area of interest or as part of a debt reduction.
Who offers corporate loans
The classic bank is not always the only point of contact when applying for a company loan. There are many other ways to finance an existing or start-up business. In many cases, a financially strong family member or a trusted person from the private sphere can help, see Private Loan. Here a contract is very advisable, in order not to settle any personal conflicts over the loan. Other options include crowdfunding (mostly money for company shares), business start-up grants (via the employment office) or funding organizations that offer funds for profitable conditions.