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Business loan from the bank

Some studies show that up to 70% of all small businesses believe that funding is a problem for growing and expanding. It is here that corporate loans (and other forms of financing) play an important role. With a loan, companies can invest in machines, enter new markets or develop new products, for example. The objective of corporate loans is thus usually to create conditions for greater future income.

Corporate loans play an important role in funding

But a business loan can also mean an opportunity to continue its day-to-day business. It can provide economic conditions in cases where profitability is poor or liquidity is low. Which business loan best suits your needs. It is not even sure that loans are the best form of financing.

Advantages with a company loan

Think about this before you sign a business loan

The fact that you as an entrepreneur want to find a business loan that is as much as possible for the business economy is a matter of course. Thus, the cost of the loan is something that should be clearly compared. But there are also more points that differentiate between corporate loans and which can be decisive in selecting loans. Want to know more? Click here!

Bail

Are you prepared to go in person for the corporate loan? It's a question you should have considered before comparing your loans. At this point, lenders are different and it is very important that you fully understand what personal sponsorship means.

Look at the loan cost

A private loan (private loan) must always be presented with interest and effective interest. It is therefore easy to set these against each other based on how much they cost. However, corporate loans are not governed by the same laws and can thus be structured in several different ways.

For example, there are corporate loans that do not have any interest at all. On the other hand, a certain amount of money is paid for the loan each month. Whether the loans are presented with interest or with fees, it is rare that the effective interest rate is presented. Thus it can be hard to clearly see which loan is cheapest.

One recommendation is to apply for corporate loans from several players. Apply for the same amount and at the same amortization period. It will then be easy to compare the total cost of the loan to find the cheapest option.

Private loans may be an option for an individual company

If you run a private company, a private loan can be a better option. This is because there is no legal difference between you as an individual and your individual company. Therefore, you always have full payment liability.

If you have just started the company or have poor financial history, the risk is high that you will be offered a high interest rate on your business loan. This is because lenders focus on the company. But personally you can have a very good financial history and thus get significantly better terms on a private loan.

The risk you take with a private loan is thus equal to the risk you incur if you sign a business loan. This assumes that you have an individual company.

Which loan provider will fit my needs?

What to compare with different loan providers

As the needs vary considerably between different companies regarding amounts, amortization and other loan terms, there is also a big difference between the different corporate loans. In addition to the cost of the loan, they distinguish between the following items:

1. Requirement for personal warranty/bail

There are three levels regarding the requirements for personal credit for corporate loans.

All about bad credit business loans. Keep reading!

The first level is that personal sponsorship is always required. This means that you, as a company signatory, will be in personal sponsorship for your corporate loan. Should the company fail to repay the loan, the lender may reverse the claim against you as an individual, which means that you are fully liable for repayment.

The second level is that personal sponsorship is a voluntary choice. This is not a requirement from the lender, but choosing this increases the chances of the loan being granted.

The third level is that personal sponsorship is never required. In this case, only the debt can be claimed from the company (provided that it is not an individual company, since you are always liable for debt in this form of business)

The advantage of taking the guarantee is that the security increases for the loan. This allows the lender to grant the loan more easily and, in some cases, grant larger loans. The disadvantage is that you, as a private individual, can be fully refundable for the entire loan amount.

2. Loan amount and amortization period

If a corporate loan is signed with a major bank, there is no clear upper limit on loan amount. On the other hand, both greater security and financial documentation are required for these loans to be subscribed.

With the lenders specializing in small business loans, a common minimum level is 10-30,000 kr and the highest level of several hundred thousand up to one million. There is thus a relatively big difference regarding the amount of loans that can be borrowed.

The amortization period also varies greatly. A few players have a fixed amortization period. This means that you can not choose the amortization period but have to amortize over the period of time that all the loans of the lender have. On the other hand, it is more common with a selectable amortization period from a few months up to 12.24 or 36 months.

3. Credit assesment

When a loan application is filed, the lender carries out a credit check that determines whether the loan is to be offered or not. This credit review may look very different. When a corporate loan is to be subscribed to a major bank, it may be necessary to show prior financial statements, business plan etc. This in order for the bank to conduct a credit check based on, among other things, this material.

Other lenders instead look at current sales to determine the likelihood that the loan can be repaid under an agreement. An additional option is that only a credit information is made to determine whether or not the company has payment remarks.

4. A binding application

There are lenders applying "binding application". If you submit an application to one of these lenders, and will be granted the loan, the money will be paid out immediately.

By far the most common is, however, that a loan application is merely a request if the company can get a loan from that particular lender. A loan proposal is then presented as the borrower may decide before the agreement may be signed and the loan is paid out.

5. Individual cost or the same cost for everyone

A few lenders offer corporate loans at the same cost to all borrowers. On their websites, it shows how much the loan will cost depending on the loan amount and the amortization period.

On the other hand, it is most common for lenders to have individual interest rates / tax rates. Therefore, you must submit an application to find out what level of interest / fee is offered.

6. Monthly payment or other time period

The most common thing is that a corporate loan is to be repaid once a month. This is similar to many other loan forms.

There are also lenders who, via the autogiro, withdraw a sum every day from the company's transaction account. As a result, a smaller payment occurs every day instead of one larger once a month.

Modern business loans

For a long time, it was obvious to go to his bank when a loan was needed for the company. With the loan application, a number of economic documents were attached and it took several days for answers to be given if the loan was granted or not. This loan process is still available and, not least, common at very large amounts.

Recently, however, a number of players have begun to offer simpler and smoother corporate loans. Some financial documents do not need to be displayed when credit testing occurs in another way. Answers to the loan application and payment of the money are done quickly and the loan amounts are relatively small (up to one million). Above all, loans for small business owners who rarely have difficulty obtaining loans from major banks.

Another option is companies that offer P2B loans. In these cases, the company manages a platform that allows borrowers and lenders to meet (completely anonymous). Through the platform, individuals and companies can lend money to companies.

For those who subscribe to the loan, they usually do not get much between signing a regular corporate loan or a P2B loan. The borrowing process, on the other hand, may vary slightly between the different companies in this industry.

This is how you take a small business loan

  1. Plan
  2. When you sign a business loan it is very important that you have a clear plan about how the money will be used. You should also have a plan for how to repay the loan. If an investment is made, a long-term loan can increase the income and thus the loan can be financed from these income. If, on the other hand, it is a renovation or the like, you need to count on average income and see if the company is able to handle the loan costs.

  3. Compare
  4. Take for the habit always compare several different lenders. There is a very big difference between these current interest rates, amortization period, loan amount, etc.

  5. Amortise
  6. Amortization can be done via invoice, car debit or E-invoice. The type of payment offered varies and in some cases an autogiro is required. Usually it is possible to repay the loan faster without incurring any costs.

FAQ - Common questions and answers

Do I have to have a personal warranty/bail for a corporate loan?

There are corporate loans where personal bail is always required, the partial bail is required and no bail is required. The applicable agreement depends in part on the amount borrowed.

However, if you have a private company and sign a business loan, it means that you always go for personal protection. This is because there is no legal difference between you as an individual and your company in case you run this business form.

Which companies can apply for corporate loans?

The type of business approved varies between lenders. There may also be different requirements for how long the company should be active or how large sales companies should have. The most common thing is that corporate loans can be subscribed regardless of company form. Instead, there are other factors that limit who gets its loan. For example, companies, or entrepreneurs, can be denied loans with payment notes.

Do I have to show financial statements, etc. to get business loans?

What documents that need to be displayed vary between the lenders. However, with a number of lenders, it is not required to show the financial statements, business plan etc. They lend lenders who lend lower amounts (up to one million) and have a faster and easier loan process than many banks.

Learn more about what to think about at the US Department of the treasury.

When should I not take a business loan?

Similar to all loan forms, corporate loans are not to be subscribed unless a clear plan is available for repayment of the loan. Business loans can be a rescue at shorter periods of poorer profitability, but the most important thing is to investigate how profitability can be improved over time so that the same situation does not occur again.

You also do not have to sign up for business loans unless you are prepared to get into what they are costing. There is a very big difference between the loans, where some have costs that correspond to 50% of the loan amount.

Apply for a business loan today

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Owning a business is hard. It takes a lot of time and effort to master and be profitable. There are lots of different solutions to get financing. We list some here below.

Financing from the bank

Getting a from the bank is a common way to raise capital. The challenge for a start-up company is to get a corporate loan at all. Usually, some kind of security is required, or you can show up on business that is heading in. Most often you need to go privately for the loan. Do you have a company that has been running for a while, with a good economy? Then it's easier. Start by contacting your bank - and consult with different banks what interest they can give you. That’s how you know what a business loan cost. But stare you not only blind to the current interest rate, a good contact at the bank that feels and your business can sometimes be more worthwhile.

Corporate loan that is not from the bank

There are new actors on the market who offer smart business loans to companies who struggle with the banks. You can apply here right now.

Small business loan from government

The government instances offers several types of loans, both in early stages and when you want to grow or expand abroad. The starting point is that they enter when you can not finance everything through another player, such as the bank, but you need one for the financier. In order to compensate for the higher risk and not to compete with the banks, Governmental instances takes an interest rate above average bank interest rates. Amortization of the loan is adjusted to your company's development and financial situation. To get the loan you need to be able to demonstrate that your business can be developed and become profitable. Equally important is that you as an entrepreneur have a will and a drive to carry on the idea.

Risk capital

In the start-up world, venture capital is the way most people talk about financing. There are different types: companies that invest (venture capital companies) or individuals (called risk capitalists or business angels). Whatever type, venture capital means that you receive money in your company by one or more investors in exchange for joint ownership.

Many take in capital from the start - and it may work well for some. But there may also be a point in waiting for you to test your idea. A proven business model is usually more worthwhile for investors - and you can spend a small portion of it in exchange for capital.

How do you find venture capitalists or venture capital companies? One way is to look around in their own networks, another is to read who goes into capital in different startups at news outlets.

Crowdfunding

Crowdfunding (or grassroots financing) is about collecting capital from a large number of people who usually give a smaller amount of goods. Most often, you use one of the crowdfunding platforms available online. The two most common types of crowdfunding are:

Money in exchange for opposition. It is because you give away a future reward against getting money now. Simple example: You should start a pop-up or foodtruck that delivers hamburgers with a push of a button on your mobile. Then you can ask people to help you get started (or grow) - in exchange for getting a hamburger when the service is launched. Money in exchange for joint ownership. Here, instead, you give away the share ownership of the company, against collecting money. In other words, one type of venture capital, but the money comes from a large number of people. There are several platforms that work with this, such as Pepins and Funded by me.

Peer-to-peer loans

This is a relatively new phenomenon that, however, grows. Basically, peer-to-peer is that private individuals can borrow from other private individuals, but now companies are also included in this umbrella term.

Support

There are a wide variety of support to seek, partly those that come in the form of loans and partly regulate contributions that need not be paid back. This is usually an underestimated way to get funding - so you have the time to put it into it it may be worth the gold. Almost all support available for search has two common denominators: they will contribute growth and they will go to some kind of innovative business concept. On the site active.se you can search for "support" and get a number of different actors, which you can click on.

Capital on its own

Own money is of course a way to finance your business, if you have that opportunity. In the start-up world, it is primarily talked about external capital, but most entrepreneurs have probably entered their own money sometime in the company's history. Own money - which you own or have borrowed - also shows to other investors and to the bank that you believe in your idea.

Other ways of financing

Capital not only needs to be in the form of a lump sum on the bank account. Leasing assets instead of buying them is a way to raise capital, as well as to sell your invoices or even better: get the customer to pay in advance.Click here to know more

When will I not take a business loan?

You might be in the position of investing in an untested product / service or untouched market? Then it may be good to do surveys and see if there is a need. We always listen to your business idea and ask what you need the money for. If you are just in the pitfalls to form your company, it can also be difficult. Especially from the banks. But then there are options like governmental services to get started, and once you get a little more spin on your business, we can help you grow further.

You should also look up with high interest rates and fees that can be expensive costs for you as a small business owner. At the bank, small businesses are seen as high risk and then the cost will be thereafter. In addition, if you have any payment notes, debts and other things that are considered negative, it will be even more expensive - if you even get a loan in the main. Here, we understand the situation for small business owners. You are often CEO, Marketing Manager, Warehouse Worker and Seller at the same time. It can be difficult to make the time available and a payment note or liquidity crisis may occur more easily than you think. Therefore, we look at the whole when we assess whether your company will get a business loan or not. With us you are at the center, not your possible problems.

Hope that you have a better knowledge about financing your company and our commercial loans in general.

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