Types of loans for small businesses

Types of loans for small businesses

Deciding to get a bank loan, the entrepreneur is faced with the choice of the term, interest, principal and, most importantly, the purpose of lending. From the correctness of the decision often depends further business success.



The choice is always there. The abundance of unfamiliar concepts confused. Banking Offers full of the terms "overdraft", "investment loans", "trade credit". Let us examine the order - a small educational program for entrepreneurs who value time and money.

Each bank offers its own thwart credit products available to small businesses. Moreover, they can be called differently, but mean the same thing.

overdraft

In simple terms, overdraft - a loan, which can take advantage of a businessman, who appear temporary, short-term need for extra cash. This form of credit is available as legal entities and individual entrepreneurs. Overdraft is given in the absence or insufficiency of funds for the settlement (current) accounts.

Advertising this loan, experts usually cite the following its benefits: the ability to timely and smoothly carry out calculations with partners; no requirement to provide a business plan or feasibility study loan, as well as the obligation to provide security; attractive interest rates; prompt consideration of the application; revising the overdraft limit when changing turnovers on the account at the bank.

Now on the timeline. The general term overdraft agreements typically do not exceed 6 months. The period for which issued overdraft, usually no more than 30 days. By credit card - up to 50 days.

commercial credit

This kind of credit granted in the form of commodities seller to the buyer in the form of deferred payment for goods sold, work performed, services rendered. In contrast, consumer credit, the object of which are the goods and services for consumer purposes, commercial loans provide each other with the current owners.

It is important that the payment for the purchased goods is delayed for some time. The need for a commercial loan due to the fact that in various fields of business during the production and circulation of capital are not the same: some entrepreneurs goods produced and ready for implementation, while others are interested in this product, do not have the cash.

In such cases, the sale of goods on credit promotes continuity of the production process, accelerates the turnover and profit increase. Commercial loans are usually short term: available only for a few months. As a rule, issued a special document - commercial bills. project financing

This type of loan provides a very small number of banks. It is implemented through financial leasing expensive and complex projects related to the acquisition of equipment. The risk of project financing is that you can spend up to six months to the bank documents and obtain a waiver.

Because of the loss of time on fundraising can be derailed the project. The fact is that the business plan is the main document when considering project financing. It should allow to assess all the risks it takes its maximum detail.

venture Financing

This long-term loan for new and existing companies without guarantees, but at a higher than banks interest. Not by chance this kind of small business financing called "risky". Phenomenon in our country is not very common, although the venture capital funds and investment companies exist in the Russian market for a long time and show a very successful results. The main purpose of venture financing - investing in the development of high technology projects. Commercial Mortgages

Mortgage loan is granted to entrepreneurs for the purchase of non-residential premises: warehouse, office, etc. The meaning of a commercial mortgage is to purchase commercial real estate lending under her own pledge. Unlike housing loans, commercial mortgage is the short term loan repayment, but fairly high interest rates.

commodity credit

Commodity loans is that the borrower is given commodity, for which he does not pay the money immediately. So can provide goods, machine tools, machinery and equipment. Commodity loan is optimal when buying expensive equipment, manufactured to order foreign companies. Experts identify the advantages of trade credit as its unsecured funding; buying imported equipment from any manufacturer at low prices; payment deferral for up to 1 year. Credit for starting a business

Find a bank that will be happy to provide loans for starting a business, it is very difficult. This is understandable: the bank can not know how successful the idea of an entrepreneur. However, some banks still offer a form of credit. Minimizing risks, the bank simply overstates the interest rate and reduces the loan term.

Loans to individual entrepreneurs

Private entrepreneurs are often unable to provide collateral for the bank loan. They also have no credit history yet, that does not allow banks to properly assess their reliability. In turn, the bank lending to individual entrepreneurs can be risky.

Thus, it may seem that unincorporated business lending conditions are not much different from private lending. Despite the similarity of the rates and amounts, this is not the case. The main difference lies in the nature of credit risk. Consumer lending is based on the fact that a person receives is not associated with the use of credit fixed income, through which repays the loan.

Entrepreneur also assesses the possibility of the return of borrowed funds through future revenues and costs on the loan are directed just to increase these revenues. Credit for business development

Sometimes experts refer to this form of "loan for working capital." This line of credit is quite common among entrepreneurs. Credit for business development is the most simple form of financing does not require collateral. The credit limit is usually set to the current turnover of the company (monthly or annual revenue).

Credit for the purchase of fixed assets

Credit for the purchase of property, vehicles, machinery, real estate - another form of lending business. Repayment is usually equal installments on a schedule agreed with the borrower. The key to act goods in circulation, equipment, vehicles, machinery, real estate, including purchased on credit. An important requirement for the borrower - the presence of income from business activities (sales of goods, works, services) during the last year. investment lending

In recent years, small manufacturing companies are increasingly interested in investment lending. Investment loan - a loan provided by the financial and credit institution person or entity for a specific investment program. Investment loan repayable on from 3 to 10 years for long-term investment projects.

The borrower must provide the bank business plan of the investment project and the financial statements in recent years. Collateral for the loan are available assets. The main uses of the investment loan: acquisition of fixed assets; modernization or reconstruction of production; the creation of new production capacity.

As this is not a complete list, entrepreneur really have to choose from. Modern banks are ready to offer several types of small business loan products: they are all different characteristic of the loan amount, timing consideration, collateral (it may not be necessary), and evaluation methods of banking risks (scoring system or an individual approach). When selecting the main thing - a careful study of lending conditions.