Business lending: features, documents and recommendations

A loan refers to the funds provided by a bank to a physical or legal person for a specific period. The transaction is confirmed by an agreement under which the borrower must repay the debt. For many, credit is the only way to get a large sum. Entrepreneurs also need funds to open or develop their own business.

Business lending is a convenient service for purchasing equipment and raw materials. Getting money is not as easy as it may seem. To make a deal, you need to familiarize yourself with all the features. After all, when you open your business it is important to be sure of getting a positive result.

Bank products

Business lending is supported by the state. Credit institutions are given quotas and instructions on the provision of money to organizations. If the firm exists for more than six months, then there is an opportunity to receive funds for development.

The more the enterprise works, the more likely it is to open a credit line and expand the commercial niche. Do it yourself and do not lose capital almost impossible. To do everything right, entrepreneurs turn to the bank, where there are financial products for all spheres of activity.

Receiving funds for small and medium business

With the development of one's own business, money is needed, therefore, small and medium business is a necessary service. The money issued by the bank is used to improve the turnover and investments of the firm:

• Purchase and repair of equipment;
• Improvement of turnover;
• The opening of a new field of activity.

Not all novice businessmen use personal money, so they use borrowed funds. These are small amounts, and they do not require a report. If an entrepreneur takes borrowed funds from the bank, he becomes a permanent client of the bank. The possibility of a significant increase in profits is provided by business lending. Banks offer customers various products with similarities and differences.

Term loan

For entrepreneurs this is considered the most convenient service. The funds are transferred to the settlement account of the organization, which has a duty to repay the funds with interest on the due date. Usually banks do not need confirmation of the targeted use of money, but they require a pledge or invite guarantors.

Lending to business allows you to buy necessary equipment, transport, and improve turnover in a short time. As collateral is provided:

• the property;
• transport;
• equipment;
• product.

While a contract has been concluded with the organization, it is possible to change the pledge, but only with the consent of the bank. If the loan is taken for a long period, it will be possible to take money for a large sum. And with a short period of time there is an opportunity to save on interest.

Special conditions

Business lending has some features. Funds are given in rubles, dollars and euros. The rate is determined by the amount, term and currency. For regular customers, banks lower rates. The special conditions include:

• Some organizations have a seasonal nature of work, so for them banks provide individual payment schedules;
• Some entrepreneurs do not have property, and then banks require guarantors.

The decision to grant a loan is sometimes accepted by analysts on the basis of a business plan. If he is a worker, then a positive response is given to the provision of money.

Credit line

Lending to medium-sized businesses is carried out with the help of collateral. The bank determines the loan period, after which the company receives funds, but not completely, but as necessary. Interest is calculated only on expenditure. This type of lending is convenient for purchasing small quantities of goods.

The credit line has 2 parameters:

• The issuance limit: the amount of funds for the duration of the line, but some banks start interest for unused money;
• Limit of debt: the client is given a limited amount, above which no money is given.

Advantages of a line of credit for business:

• Speed of payments;
• Increase in the limit;
• Use of funds for a long time;
• Payment of interest only for the funds used.

Overdraft

Lending to medium-sized businesses can be carried out through overdraft. This service is available in the presence of a settlement account, and for this you do not need a deposit. Funds are provided on fairly favorable terms. The bank analyzes the movement of money on the account. As a result, the amount that will be issued to the client if necessary. When the account is replenished with new funds, they are closed.

The work of funds

There is a fund to promote small business loans, which greatly facilitates the situation of entrepreneurs. The organization acts as a guarantor, helping borrowers get a loan. Assistance to small business crediting is provided through cooperation of funds with banks.

The businessman should apply for a loan, indicating that he has a desire to have support from the state organization. The bank considers the situation, taking into account the necessary details. After this, a contract is drawn up, the application for a suretyship is sent to the fund. There is a signing of the document on three sides. The small business lending fund can take a small percentage.

What is required to know when contacting a bank?

It should be borne in mind that such a loan is issued at a high interest rate. Therefore, you should apply to the bank only if necessary. If you still need the money, then you need to draw up a contract carefully. In order for the decision to be positive, you need to prepare a business plan in advance. It shows why money is required and how profits will be accrued.

The reputation of a businessman is important. It is necessary to provide accounting documentation, which will increase the chance of receiving money. It must be properly designed to not be refused. Average business causes more confidence in the bank. The pledge can be provided by the means of the enterprise, goods, property.

What documents are required?

The account is opened for legal entities on the basis of the provided documents:

• statement;
• Copy of the articles of association;
• A copy of the balance sheet;
• A copy of the memorandum of association;
• A copy of the license.

All scripts are necessarily certified by managers, and copies - by a notary. Other documents may also be required.

Assessment of the borrower

There are 2 types of the borrower's assessment: objective and subjective. From the first, financial statements are taken into account, and from the second, the following aspects:

• Management level;
• State of the industry;
• Market situation;
• financial reports.

With business lending, there are many risks. With some organizations, the bank has never worked, which causes distrust in it. Every year the number of enterprises that use financial services increases.

Where to go?

For business loans are issued by the bank "VTB 24". This banking product is called Kommersant. Businessmen have the opportunity to receive up to 1 million rubles for a period of 6 months to 5 years. Overpayment is charged at a rate of 21-29% and is determined by the maturity of the debt. "VTB 24" offers businessmen to use the following services:

• Overdraft - overpayment equal to 11%, term - 1 year.
• "Revolving credit" - is formalized at 10.9%, period - 2 years.
• "Investment loan" - the rate is 11.1%, the term - 84 months.

These programs are also available at Alfa-Bank. The smallest amount is 3 million rubles, and the maximum amount is 5 million. The repayment period can be from 6 months to 3 years. Alfa-Bank issues cards with a limit of 500,000 rubles to business owners. "Uni Credit Bank" provides funds to improve small and medium-sized businesses. The amounts are from 500 thousand rubles to 25 million. The repayment period is from 6 months to 2 years. Bank "UralSib" gives out loans to businessmen from 300 thousand rubles to 10 million. Repayment time - 1 year. You can apply to Promsvyazbank, where customers are issued from 5 million rubles for 10 years. Here you need to pay the first installment of 20-40%. The most profitable offer is from OTP Bank. The rate is 9.5%. You can take a maximum of 40 million rubles. Sberbank of Russia also provides business loans. Entrepreneurs can expect up to 200 million rubles. And the rate is 13.26%.

To take advantage of an advantageous option, it is advisable to familiarize yourself with several offers, and then choose the most suitable. It is best to apply to several banks in order to increase the chances of obtaining funds. If there are several approvals, then there is a choice. Today, lending is developing quite successfully. Almost every organization can use money. If the debt is repaid in a timely manner, the banks provide more favorable conditions for their clients.