In Germany, corporate loans are used by medium-sized companies, for example, to purchase new machines or a fleet of vehicles. In addition, corporate loans provide fresh capital for the acquisition of new technologies. These include, for example, online shop software or logistics software.
Capital for starting a business
corporate loans are also used to finance start-ups. Banks as lenders provide capital in this case so that entrepreneurs can pay for the necessary equipment or equipment for the foundation. Similarly, employee salaries or fees may be paid through start-up loans for the first time.
Short-term or long-term corporate loans
In principle, corporate loans are divided into two different types, which are determined by the respective term.
- Short-term corporate loans
These loans have a relatively short maturity and quickly provide companies with capital, for example in the event of sudden revenue decreases or the cancellation of an order. Short-term corporate loans are usually issued as a term loan, guarantee credit, discount credit or current account credit. Short-term credit can prevent the company from defaulting on payments.
- Long-term corporate loans
This form of credit is also called an investment loan. These are loans that are needed for major purchases such as machinery or technology. These loans then have the longest possible duration.
Only for self-employed persons or companies
The purpose of a corporate or corporate loan is that the financing benefits the company. Therefore, in the case of corporate loans, the beneficiaries are companies or self-employed persons who need the capital for their business.
The public benefit from the loan amounts indirectly through investments. In this way, the company credit differs from the personal loan. The latter only serves the fulfillment of personal wishes.
Corporate loans can be entered into by legal persons under public law or private law as well as by commercial partnerships. As a rule, the managing director signs the signature under the credit agreement. There are several managing directors sign this together.
Requirements for existing companies
When applying for a company loan, the creditworthiness of companies is checked. For a first audit, the financial data are used by similar service providers like SCHUFA.
But SCHUFA is only responsible for private persons. However, the SCHUFA data may also be used to further examine the borrower’s creditworthiness.
Disclosure of the financial situation
Similar to private customers, business owners must also explain the financial situation of their business. The following documents can, therefore, be requested from the bank:
- Business reports
If there is no current tax assessment, banks can request a business evaluation (BWA). A tax accountant usually lists all receipts and expenses of the current financial year.
If companies have to account, balance sheets must be presented before financing.
- Commercial Register excerpts
Here, the lenders learn more about the company owners and the distribution of company shares. For example, liability for payment default is regulated differently if a GmbH is financed or a sole proprietorship.
- bank statements
Using up-to-date account data, banks can gain an overview of their current business activities.
- tax bills
The tax assessments provide banks with insights into the profits of recent years.
- Statutes and contracts
By examining agreements, banks can control liabilities and obligations to third parties.
Based on these documents, the bank not only examines the current situation but also attempts to derive further business development. In most cases, banks have their own scoring system to rank the applicant’s creditworthiness. For example, the interest on the company loan depends on this classification.
Credibility as an important factor
Numbers are only one page when applying for a company loan. At least as important is the personal credibility that a borrower emits in a corporate loan. Ultimately, banks take a large risk with high loan amounts. That is why the personal appeal of the applicants plays a crucial role.
5 credit application tips for the company
- Make the financial situation of your company as open as possible. Do not obfuscate the facts. Sooner or later, the bank will notice these “negative aspects” anyway.
- Be confident, but not overbearing.
- Dress appropriately, not too casual, but not too formal.
- Stay authentic. Do not try to hire another person.
- Do not give evasive answers to possible questions.
Apply for company credit at the house bank
It can be an advantage for all to apply for a Greenbiz2013 payday loans help. Those who have proven themselves there by a very good payment and liquidity can have advantages in the application for credit for his company.
Company credit for entrepreneurs: Requirements
Business start-ups or self-employed persons require special leverage because they usually do not have enough capital when they are set up.
In contrast to existing companies, entrepreneurs cannot undergo a credit check. This applies at least to the business, as there are no valid business data yet. But even here, there is the possibility that banks still conduct a conventional credit check to test the financial management of the applicant.
The business plan replaces the credit check
Business founders have to submit a business plan for their loan application. It is important to the lenders because it shows whether a business idea can be successful.
At the same time, the business plan proves that the start-up entrepreneur has the necessary experience to make the business idea successful in the long term. In addition, the business plan indicates which competition the company has to expect.
The aim of every business plan is to convince the lender of the business idea and to provide him with adequate solutions for possible risks.
A business plan should be able to answer these questions
- Who founds the company? What know-how and what skills does the founder have?
- What does the company offer and what is special about its services or products?
- What is the market environment?
- Is there a competition?
- For which target group is the products or services intended?
- What plans are there in marketing?
- For which type of company does the founder decide?
- Are employees needed? Which formalities have already been fulfilled / still have to be fulfilled?
- What opportunities and risks does the business idea have?
- How should the company be financed?
- Are there any documents, certificates, certificates or other official documents confirming the services or knowledge?
The financing plan – that’s what matters
The financing plan is an important part of the business plan. This section explains exactly how much equity there is and how much leverage is needed. Thus, the Bank’s financing plan says exactly how much money is needed for funding.
Alternative financing options for entrepreneurs
Start-ups do not always have to go to the bank if they need outside capital. Possible contact points are also:
- Friends and relatives: For the start often friends and relatives can help out with capital. To avoid dispute, it is recommended to set up a contract with friends.
- Venture Capitalists: Entrepreneurs can borrow money from investors. For this, they can give company shares. The investors may be other companies or private investors.
- Crowdfunding: Crowdfunding is a modern variant of corporate finance. Here, private individuals usually provide different amounts of money. Crowdfunding is usually handled via the Internet via so-called “crowdfunding platforms”. Investors will typically receive shares in the company or the financed product as soon as it has been completed.
- Funding Organizations: Organizations such as the Business Angels encourage founders by providing capital on favorable terms. Entrepreneurs can also fall back on various initiatives of the federal states, municipalities or the federal government.
- Start-up grant: Those who receive unemployment benefit have the opportunity to receive a start-up grant from start-ups. The grant is requested from the responsible employment office. The authorization is subject to rules similar to those applying for a company loan from the bank. For example, applicants must also submit a business plan.
Collateral for a corporate loan
For corporate loans, the bank may require different collateral. A distinction is made between security and personal security. In the case of personal safety, for example, another person vouches for the credit.
In the case of physical security, assets are deposited as collateral. Usually, personal security is not sufficient for corporate financing.
The following are the values for the secondary security:
- life insurance
The type of security can affect the conditions, such as the interest rate.
The peculiarity of mortgages
When a security is deposited, the burden on security is usually reduced by reducing the credit debt. One speaks in this case of accessory security.
However, if a mortgage is entered on a property or land for the company loan, the burden is fiduciary. This means that the mortgage remains the same, no matter how much of the loan has already been repaid. Only when the loan has been fully settled, the mortgage will be canceled.
Mortgage and mortgage
For banks, the mortgage or the land charge represents a particularly high level of security, since it can also take advantage of it, if in turn there are other claims from other contracts with the borrower.
Alternatives to corporate credit
To provide themselves with fresh capital, large companies can also issue bonds or securities. If bonds are issued, companies must take into account that they can realize the guaranteed interest on the capital through corresponding income.
There are many other requirements to be met when issuing shares. For example, the company first has to be transferred to a stock corporation.