What type of loan should I choose?
In the past, applying for a company loan was a very long and intricate procedure. Banks approached business customers with reserve, which meant that the list of requirements was very long. Today, loans for companies are already available much easier – also without certificates.
It’s smart because you can pay off outstanding debts and increase the chances of getting good rebates, plus the fact that you will have a commitment to a single debt – not several. Paying off debt with a personal loan is one of the options to balance the budget. You can also borrow to pay the overdraft.
Loans in Russia, and not only, can be divided into two areas: retail and corporate loans.
Small loans represent the following products:
- Consumer loans.This type of loan is characterized by the issuance of funds to individuals, employees for the purpose of consumer (purchasing households and other equipment, issuing cash, credit cards, etc.).
- Car loans for individuals.This type of loan means the issuance of funds to individuals for the purchase of vehicles. Basically, banks have limitations – the inability to purchase special equipment in this way.
- Lenders Credit residential or non-residential loans for real estate. They show a significantly lower level compared to other products, as well as long-term lending (of the order of 10-25 years).
Types of loans in the Russian Federation for legal entities
Unlike SME lending, the corporate product line is much wider. Generally, the following types of loans to legal entities can be distinguished:
- Loans for the purchase of real estate.This type of loan allows legal entities to purchase non-residential and residential real estate. The difference from a mortgage for individuals lies in significantly shorter credit conditions (5-10 years).
- Vehicle purchase loan. Legal entities as well as entrepreneurs have the opportunity to purchase both cars and trucks, special vehicles.
- Loan for the purchase of equipment – the most popular in organizations. Technology does not stop, so the emergence of new manufacturing solutions allows you to work more efficiently and effectively. Getting such equipment for cash is not available to everyone. The proceeds come with the opportunity to buy it on credit. The main prerequisite for loans for the purchase of equipment is the debtor’s own contribution. Sometimes it can be from 20 to 50 percent of the loan amount. The duration of such loans shall not exceed five years.
- Loan to replenish current assets. This is a short-term type of loan. The purpose of this product is to replenish current assets (purchase of goods, raw materials, consumables, etc.).
- Overdraft – short-term credit. Type of loan without collateral for legal entities and entrepreneurs. The duration of such a loan is one month. Mandatory condition is to reset the overdraft every month and review the limit. Basically, banks set a limit depending on the volume of current account turnover. In other words, an overdraft is an opportunity to get into the current account with a negative amount for a certain amount.
- An invoice was offered as a kind of lender. The role of factoring is to provide funds to the enterprise in the event that the enterprise has sent the goods and there is no payment yet. Based on contracts concluded with the buyer, the business seller asks the bank for a factoring application. The bank deals with the situation and suggests that the seller sell with the bank. The bank pays a certain value to the seller of the goods sold and the buyer counts not only with the seller but with the bank. Upon final agreement with the buyer, the bank will return to the seller the balance of money received for the goods. For this type of lending, the bank pays banks some commissions.