Every company needs constant investments to develop. This involves incurring certain expenses, for example for the purchase of new equipment. Not all entrepreneurs have the right amount of money or do not want to involve equity capital. So how can you get the funds you need? It is then worth taking advantage of a business loan. Let’s check what are the possibilities.
A loan and a loan – what are the differences?
Many people misuse these two terms, using them most often interchangeably. However, it should be remembered that a loan and a loan are two separate forms of financing. Loans can only be granted by banks. In turn, loans can be offered by any financial institution, and even a natural person. So what’s the difference between them?
The loan must always be for a specific purpose. In the case of a mortgage, the purpose is to buy a property, a consolidation loan is intended to pay off financial liabilities, and an investment loan for companies must be used for a specific investment. It is different with a loan. When taking a cash loan, we can use it for any purpose, as in the case of a mortgage loan. In the case of a loan for companies, the entrepreneur also does not have to explain to a bank or other financial institution what he intends to spend money on.
Business loans from banks
Most entrepreneurs who want to raise capital for their business go to the bank. Most often to the one in which they have a business account. What opportunities can they use there? Some banks offer business owners loans for start -ups . It is a financial aid designed for newly opened companies, requiring no security. The amounts that can be obtained are not too large, but they will be enough to open and start a small business.
If the company has been operating on the market for a long time, it can use a traditional business loan . It can be used for any purpose related to economic activity. It can also pay off other company liabilities. To get it, you don’t need to present any business plans or financial forecasts. Few when material security is also required. By using such a loan, you can get up to PLN 500,000.
If the entrepreneur has real estate and is ready to secure it, he can take advantage of a mortgage for companies . Again, there is no requirement to present a business plan or financial forecast. However, a much higher amount can be obtained than in the case of an unsecured loan. In this case, the loan value can be up to 60% of the property value. The loan period is also longer, so you can pay a lower installment.
Business loans offered by banks
Entrepreneurs can also take advantage of corporate loans. The most common ones include the working capital loan and the investment loan for companies. As part of the first one, you can use several options:
- overdraft facility,
- revolving loan,
- non-renewable loan
The working capital loan can be used for any purpose related to business activity. It is intended mainly for companies with a longer history and can be secured or unsecured. In the latter case, however, the granted limit will be much lower.
In turn, the investment loan is intended for financing investment projects and can be obtained even by a newly opened company. In order to receive it, however, a business plan must be presented, on the basis of which the bank estimates the feasibility of its implementation. The investment loan may be used, inter alia, for the purchase of: real estate or land for the company, various types of machines (e.g. agricultural or construction), equipment (e.g. laptops, printers or scanners), intangible assets (e.g. licenses or patents).
Non-bank loans for companies
Sometimes it happens that business loans are not available to many entrepreneurs. This can be influenced by many factors, such as: too short a period of business, too low income or revenues, lack of adequate security or a bad credit history. Then they can take advantage of non-bank loans. Their biggest advantage is that they can be obtained very quickly and usually without unnecessary formalities.
The amounts that can be obtained in non-bank institutions, however, are much lower than those offered by banks. The period for which loans for companies are granted is also shorter . However, they can be a good solution to short-term liquidity problems, so they can be used in some situations. When it comes to non-bank loans, there are three options to choose from: an installment loan, a secured loan or a payday loan for 30 days. The amounts that can be obtained usually do not exceed PLN 20-25 thousand, although there are companies on the market where it is possible to obtain a loan of up to PLN 100 thousand.