Business loans and private loans

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Business loans in general may differ a lot. In terms of interest rates, offered loan amount, amortization period, fees and much more. Make sure you read up on the alternatives at hand and give it both a second and third thought. It might be expensive if you choose poorly.

A corporate loan or a private loan?

Well, if you own a small business and have to take a loan and have a good relationship with the bank, you might get a good deal for a private loan. Maybe you gave top up your mortgage or use other equity as security. But we would adwise you to think twice. It is a good strategy to separate your personal and business economy to avoid problems in the future. If the company is struggling you might be able to ditch it and move on. If you are too invested personally you might sink together with the ship, so to speak.

Business loans for small company

Since the entry of the Internet and more digitalized solutions for identification and security the amount of companies going into fintech and financial services are rising. Quickly! If you used to book a meeting at your bank and then fill in an manual application and wait for week, or even months, now you can apply online in seconds and have the money the same day. "Same day loans" are getting more and more common and the banks are still focused and mortgages, insurances, car loans and privat loans. Not why they started in the first place - To protect money and offer finance to businesses.


Unsecured business loans

The banks often take something in protection. A security if you or the company can't pay back the money. But these new players within fintech and finance look at other things. The check your cash flow and turnover. History is not as important to the fintech companies as it is for the banks. Banks need yearly reports, balance reports and much more information than the new financial institutions need. Want to know more about the larger commercial banks? Read more

So, if you can't get a corporate loan from a bank, check with the others to see if you can get an unsecured business loan. It might be a little higher business loan cost but you will feel much better knowing that you wont loose equity. Also, these loans to businesses often have a shorter loan period. That way you will be debt free a lot faster. Good, right?


Loans in general

Loans means the right to use for a certain period of time something that belongs to someone else or the agreement giving rise to this right. If compensation is paid and the loan does not refer to money, it is usually called something else, such as renting, deliberately or leasing.

The term loan means, according to the same terminology, no loans of total money without loans of items where the borrower expects to get exactly the same item back after the loan. With loan of money (pre-stretch) you are not interested in getting back the loan notes and coins without the amount of money you borrowed.

Credit

It is often understood that a loan relates to money loans. By means of a loan, then, the agreement means that a party, the debtor, receives a sum of money from the creditor and undertakes to repay the same amount. The debtor gets into debt to the creditor who receives a claim. The parties to the loan agreement may be private individuals, companies, banks and credit institutions, states, municipalities, associations or other institutions. In law, the term "credit" is used instead of money.

If compensation is to be paid for the loan, it is called for interest. Sometimes there may also be other remuneration for loans, such as installation fee.

Individuals and companies often take loans from banks or credit institutions. As a rule, the payment of such loans occurs gradually during the term of the loan. These installments are called amortization. Depending on the form of loan, the repayments may take place in different ways. The most common forms are straight amortization and annuity loans. The loan, especially shorter loans, can also be amortization-free. Then the entire sum is paid when the loan period expires.

According to the Consumer Credit Act, banks and other credit institutions are required to investigate the applicant's repayment capacity before the loan is granted. Often a credit information is included in the survey. It is now possible to make a so-called consolidated credit report, where several banks can be gathered under one issue at UC, in order to offer a loan proposal without affecting the impact of other banks. An applicant with low creditworthiness can be denied loan, required for additional security and / or pay a higher interest rate. All stakeholders conduct own risk analyzes that control those who are considered more risky to lend to or, for the less part, less risky.

Sometimes the debtor puts some kind of security, puts something in pledge, to guarantee the repayment. This happens, for example, for home loans, but may also happen with other loans. Companies that give less loans to a handpant is called a mortgage bank. Items that in one way or another serve as collateral for repayment of loans are said to be borrowed.

Another type of security is the guarantee. To pay for or pay for a loan means that the guarantor (not confusing with the creditor) enters the debtor's place if he can not pay. The guarantor then receives exactly the same obligations as the debtor.

Written loan agreements are called debt securities if the loan relates to money. A debt certificate, however, does not have to be a legal agreement. It might as well be a one-sided commitment made to the proprietor. The state and large companies use this to borrow money by selling (emmitera) any form of standardized debt securities. For example, it may be bonds or treasury bills. Trading in such loans occurs in the credit market.


How to finance your business with private financing

It's a tricky business but might be worth the while in the end. Private investors or that you finance it by yourself. Read this guide on how to finance you business by private placements here.

Car loans

Car finance are a loan for buying a car. In general, these loans are designed as annuity loans, unlike ordinary bank loans, which are usually based on straight-line repayment. The advantage of annuity loans is that the monthly payment is the same as long as the interest rate is unchanged. If the car is sold by a dealer of cars, the car is often taken as collateral for the loan, which is registered in the car register by mortgage prerogation, called a credit barrier. Usually agreement is made regarding ownership, which means that ownership remains with the seller. If the car is not taken as collateral, the loan is called blank loan. When a car is sold by a private individual, the financing usually takes place through blank loans. Since no specific security exists, interest rates will be higher on these loans. If you own a business you can buy a car with a business loan. It might be better than taking a private loan on you as a person. So look into what corporate loan you can get and what the business loan cost will be.

Apply for a small business loan

Now when you have more knowledge about business loans and loans in general - Apply here!