- What types of company can obtain a bank loan?
- What is required to obtain a bank loan?
- What collateral and repayment requirements will the bank have?
- What choice of loans do banks offer?
1. What types of company can obtain a bank loan?
All types of company. It doesn't matter what sector you operate in or what legal form of business you have.
2. What is required to obtain a bank loan?
As the bank must have confidence in you as a customer, it will want to assess your ability to pay back the loan.
When considering your application, the bank will look at the following:
- You as an entrepreneur (experience, personal finances, references and training).
- Your business plan; whether it is realistic and detailed.
- Other owners of the company if relevant.
- For established companies, the bank will also examine the balance sheet, annual accounts and maybe your tax return.
Banks and financial companies are more likely to lend to established companies which need to invest in equipment or machinery.
3. What collateral and repayment requirements will the bank have?
Banks do not generally take risks and always require some form of collateral. If you have managed previous loans properly, your chances of borrowing more money increase. For a newly started business, the entrepreneur's personal finances are also considered.
Loans must always be repaid, whatever happens. The interest rate is high if the risk is assessed as high. The bank is rarely an alternative for companies of questionable solvency.
4. What choice of loans do banks offer?
There is a wide range of loans available if the investment is safe and the business stable. The loans are available to all types of business and all sectors. Bank investments may be appropriate for long-term and short-term investments, and for covering variations in current expenditure.