Business loan – Types of loans a company can apply for

Company loans

Company loans


Both novice entrepreneurs and experienced business owners need financial resources to develop and maintain their business. If the company has no savings – it usually turns to the bank for financial support. The offer of financial institutions is quite wide – from a start loan, through funds for current operations, through leasing financing, revolving loans or an investment loan for the development of an enterprise. Not every business can be fueled by the benefits of YEL for companies. So what will turn out to be the best solution?

Business loan – how to choose the best one?

Business loan - how to choose the best one?

The choice of the best offer should always depend on the legal form, creditworthiness and collateral held. Financial analysis of company loans is usually a bit more complicated and often requires the delivery of many additional documents. Of course, everything depends on the choice of the product you are applying for. Other analytical requirements will be provided for developer loans, different for working capital loans, etc. Each bank has its own internal rules for processing applications and requires a different number of documents. In particular, if you are applying for funding at a bank other than your company account. The bank in which we hold funds and cash flow should always be our first direction, because this bank will require less. It is then worth taking advantage of the full opportunities offered by the financial market for corporate clients, it is best to work with intermediary offices gathering the offers of most banks in one place. Only in this way can you perfectly match an attractive offer to your options. And if you do not have creditworthiness, there is no reason to give up. We should remember that each bank calculates creditworthiness differently, so in order not to make unnecessary inquiries that reduce our ability, it is best to entrust the matter to specialists in this field. You can also start your own business using YEL for sole proprietorships.

Revolving business loan

Revolving business loan

Working capital loans and investment loans are among the most popular loans among entrepreneurs. What are their characteristics? A working capital loan usually has a shorter repayment period. Its amount and general repayment terms usually depend on the company’s financial situation, its income and market position. The better they are, the better the conditions and the higher the chance of receiving it. Loans for companies in this form can be a great way to finance not only larger enterprises, but also current expenses related to running a business. Rotary credit for companies is very convenient and willingly used by corporate clients. It can be divided into tranches paid within a specified period of time or once. It may turn out to be a good and strategic solution to keep your business liquid. Even more so when we need funds for an investment and we plan a return in a short time.

Investment company loan

Investment company loan

An investment loan for companies is another very popular product that entrepreneurs like to use. It is provided together with the security. In this case, the bank secures the liquidity of repayment of the loan granted on the subject which was the purpose of the investment. Similarly, if the subject of the investment were e.g. apartment blocks, they will be a collateral for the loan until they are fully repaid. Co-financing for companies in the form of an investment loan is usually long-term. For the customer, this can mean not only a higher loan amount, but also a longer loan period. A downside may be the required own contribution in the amount determined individually to the applicant’s capabilities.

In summary, if you are considering a short-term corporate loan, it’s worth using a working capital loan. Investment loan for companies is associated with a larger undertaking and requires specifying a specific goal – investment as well as having own contribution.

Loan for new companies – how does it work?

Loan for new companies - how does it work?

So what are the owners of startups who are just starting their business and cannot present documents certifying the company’s profitability? YEL funding for the company is not granted to every entrepreneur. In this case, a loan to open a business may be the best solution. Banks have a special offer for such customers, which is a loan for start-up companies. Very often it allows you to start a business. The condition for receiving such a loan is submission of an appropriate application specifying the amount for which it is planned to apply and additional documents. They are required in a much smaller amount than even for the loans described above. This solution can sometimes replace even YEL subsidies for small businesses (it certainly requires fewer applications), and verification and decision times are usually much shorter. Funding for a company that starts operations can take several forms: a traditional loan transferred to a company account, a credit limit or a credit line. However, in the absence of a company’s revenue history, the bank usually requires a different form of security. It may also request cooperation agreements with potential contractors or document experience in the industry in which we start working on our own account. It can also be an assignment of receivables, pledge, promissory note, surety or mortgage. It is a good alternative for people who do not apply for YEL subsidies for companies. Loans for new companies can be a material impulse to launch your own startup. Co-financing of a company that starts its activity often enables the purchase of necessary equipment, software, etc. A loan to open a company is offered by most banks, and the choice of the best solution should be left to the experience of an adviser.

Company loan – what are the other possibilities?

Company loan - what are the other possibilities?

In addition to these three basic types of banking products, you can also look out for a long-term business mortgage. In addition to it, a business loan can also be in the form of leasing, leasing loan, development loan, consolidation loan and factoring, which enjoys great interest.

In the case of leasing, it is currently the cheapest source of financing for companies.

Let’s also remember the entire installment is at the entrepreneur’s expense, which often improves the financial liquidity of a new business. Currently, in every leasing company, the starting entrepreneur is the fastest in receiving support for the purchase of a fixed asset for the company. The leasing company will provide financing faster and with a minimal amount of documents due to the fact that in the case of leasing, the purchased item is always secured (machines, cars, computers and even software or mobile phones).

Factoring involves assigning your receivables through a factoring company. It regulates the company’s cash flow, increases working capital and increases balance sheet liquidity. Factoring reduces the costs of bookkeeping and overheads. It allows you to make cash payments to your suppliers, which means you can take advantage of discounts and reduce production costs. Factoring can be divided into three main types. Full factoring, i.e. one in which the factoring company assumes the risk related to the insolvency of contractors. Another type is incomplete factoring, i.e. one without risk of insolvency, and mixed factoring, i.e. a combination of both solutions up to the amount of a certain amount. If it is exceeded, the entrepreneur bears the risk of insolvency. So, as you can see, a business loan is a fairly broad term, which covers quite a lot of banking products.

Co-financing for companies – YEL funds or another solution?

Co-financing for companies - YEL funds or another solution?

Of course, a company loan is not the only solution to finance the current and future expenses of a corporate client. Virtually every entrepreneur can apply for additional funds from YEL funds. YEL for sole proprietorships can be a smart and good solution for starting and expanding your own business. Co-financing for a company, however, requires proper preparation, collection of documentation and submission of an application. Another example may be getting funds from crowdfunding, but in practice it is difficult to collect a sufficient amount. In any case, a perfectly prepared business plan is the basis for taking any step – regardless of whether it is YEL funding for companies or a traditional company loan.

Quite a wide and very competitive offer of banks allow credit to be obtained by entrepreneurs conducting virtually all types of activities. Regardless of whether it is, for example, a civil law partnership, limited partnership or joint stock company – banks will find a solution for the financial needs of virtually any company.

It is worth meeting an adviser and discussing your credit needs. We should remember that a proven advisor on financing enterprises has full knowledge of financing options, is able to accurately determine what will be the best and cheapest solution for us and above all knows where we will receive financing at all.

Leave a Reply

Your email address will not be published. Required fields are marked *