Whether you have just established your business or aim to grow; You can get the financing you need by taking advantage of loan products that will take your business to the next level. At this point, questions such as what is a loan and what are the types of loans are looking for answers. In this article, we know the credit issue closely.
Loan, which refers to the granting of a certain amount of purchasing power to natural or legal persons for a certain period of time in return for a price such as interest; It is offered by banks from small and medium-sized businesses to large holdings, and all firms benefit from a variety of loan products.
One of the most important points you need to decide on the use of credit is the maturity time. Short-term loans to meet the short-term cash needs of your business; For other fixed asset investments such as the purchase of fixtures and property, we recommend that you turn to long-term loans. If long-term investments, whose income contribution will be realized in a long period of time, are financed with short-term resources, the company may be squeezed into cash flow and may face the risk of depleting its equity.
What are the types of business loans?
Commercial loans used by companies to grow, develop or continue their activities; They are classified according to factors such as maturity, collateral and quality. Let’s examine the most popular types of commercial loans:
Loans with monthly installments:
Since the loan is paid monthly, it does not require a cash outflow at once.
You can turn to loans with monthly installments in investment and debt financing that your business can spread over the medium and long term.
Debtor current account:
In the debtor current account, businesses have a credit limit allocated by the bank. When you need money, you withdraw money from the account, and with the next incoming money, you pay the money you withdraw first. Interest is usually accrued quarterly on the average balance. When you do not know when you will have the cash you need, you can use your overdraft account to pay.
It is a demand deposit account that can meet urgent payments such as checks, invoices and taxes within a predetermined limit. When there is not enough balance in your account, you can apply for a overdraft account. You can prevent additional interest and penalties by making the principal and interest payments on time.
In spot loans, the entity pays the money it withdraws for a specified maturity in one go, together with the interest at the end of maturity. The interest determined on the day the loan is granted remains the same throughout the entire process. You can use spot loans in a scenario where you do not want to be affected by interest rate fluctuations.
Discount (surrender) loan:
It is the payment of checks and bills that are not yet due, by deducting their interest and expenses until maturity from their written value. We recommend that you use this type of loan to cash your notes and checks before their due date.
Letter of guarantee:
In this loan application, the bank undertakes with a letter in which a certain amount will be paid unconditionally in case of failure to fulfill the commitment in matters such as the delivery of goods, payment of the debt on time, and the execution of the work. Letters of guarantee, which can be arranged for a period of time or indefinitely depending on the content of the work, are one of the safest forms of contracts to meet mutual commercial expectations.