Investment loan – what is it and how to get it?

August 23, 2018 How to get an investment loan? Contrary to appearances, this is not a complicated procedure, but you can not do without a good business plan. A business loan gives you the chance to finance investments that will further increase its capital. However, for banks, granting an investment loan is always a risk – after all, an investment does not always have to be hit. More knowledge about investment loans in the text. 

What is an investment loan?

What is an investment loan?

This type of liability is one of the loans most frequently chosen by entrepreneurs. In addition to the investment loan, business owners can choose from products such as working capital loans and cash loans. The latter is best chosen using a cash loan ranking.

An investment loan is a commitment that an enterprise incurs to pay for new investment in the company – those that are expected to increase or maintain the company’s assets at its current level.

The loan amount depends on several factors: the company’s financial standing, the risk the bank will take in offering support to the institution and the company’s turnover. To get an investment loan, a business usually needs 20-30 percent. own contribution. The exact rate depends on the bank’s requirements. There are banks that offer 90% loans. investment value, however, usually their offers are more expensive than those institutions that require more input.

An investment loan may be granted for up to 20 years. It is a long-term loan – i.e. one that takes over a period of three years (which does not mean that it cannot be repaid earlier). Other types of loans due to their repayment period for short-term (up to 1 year) and medium-term (from 1 to 3 years) loans. The duration of the commitment is termed maturity.

What can you get an investment loan for?

A business loan can be used for fixed assets, intangible assets and acquisition of shares and securities.

What can be included in fixed assets?

  • Machines and devices used by the company to produce goods,
  • means of transport,
  • real estate belonging to the company,
  • other items that are necessary for the supply of goods or services by the enterprise.

Intangible assets, in turn, include various patents, licenses and copyrights. You can take an investment loan because they are simply subject to valuation and can be traded in the company. What about securities? Thanks to the corporate loan, you can buy shares in other enterprises or bonds.

Importantly, some banks provide the option of taking an investment loan for another investment loan.

How to get an investment loan for companies?

How to get an investment loan for companies?

Additional capital is an opportunity for the enterprise to develop, but not every company has free funds for new investments. An investment loan is the answer. How to get him? Contrary to appearances, it is an uncomplicated process that resembles taking a regular mortgage. The difference lies in the documents required by the bank and the conditions that must be met.

The entrepreneur must prepare for applying for an investment loan. First of all, before contacting the bank and choosing an offer, he should talk to a financial advisor who will assess the risk and profitability of the investment. Then prepare all the required documents (the bank always indicates what it needs – but they are always documents confirming income) and the business plan.

A business plan is a document that is supposed to prove to the bank that a given investment will pay off, therefore the entrepreneur will be able to repay the commitment. If the business plan contains factual errors or shows from the start that the investment is unprofitable – then the company has no chance for an investment loan.

Who can take an investment loan?

  • Newly established enterprises,
  • companies that have been on the market for a certain time,
  • physical people.

Not just an investment loan – other opportunities for companies

An investment loan is one of the three major bank loan products available to companies. The others are:

  1. credit line,
  2. revolving loan.

The main difference between an investment loan and a revolving loan is the purpose for which you can borrow money. Money from the “spinner” can only be used for current expenses (purchase of materials, salaries for employees) of an already existing company (minimum 12 months) on the market. In turn, the money from the investment loan can be used to finance fixed assets. This product is available to companies that are just emerging.

A credit line is a product that otherwise is simply called a revolving loan (loan in a bank account). The customer and the bank set the maximum amount he could borrow and this is what becomes his account limit. The limit is always available (until it is used) – the customer uses the allocated money when he needs it. The granted funds (after paying off the debt) can be used many times.

What to look for when choosing an investment loan?

A company loan is a liability that the entrepreneur will pay back for years. Among others for this reason he should know exactly the terms of the loan he wants to take out. There are items whose presence and cost must always be checked. These include:

  • loan interest rate (jabank rate, margin),
  • commission and credit insurance,
  • application processing fee (sometimes it is even PLN 1,000 and if the bank requires it, it must be paid even if the decision is negative),
  • fee for granting the loan or its activation.

Some of these fees are fixed and some are one-off. The same fees will not appear in every bank – e.g. not every institution charges money for processing an application.
The margin is negotiable. An aware customer can thus negotiate lower loan costs. The amount of the margin is calculated by banks by determining the level of credit risk and the financial standing of the entrepreneur.

What else is important for the borrower is:

  • loan repayment terms,
  • time of consideration of the application,
  • loan collateral – is it required and what are its acceptable forms,
  • maximum investment financing amount,
  • abusive clauses – i.e. checking whether the contract does not contain so-called prohibited clauses – created in the contract contrary to applicable law,
  • possibility of early repayment – does it exist and what are its consequences.

Investment loan – the most important information

Investment loan - the most important information

You don’t have time to read the entire text carefully? Does not matter. We have prepared a quick overview of investment loan information for you. In the summary you will find knowledge about what this type of business loan is and how to get it, and when it is better to opt for another banking product.

Investment loan – everything you should know:

  • This loan can be granted for a period of one to even 20 years.
  • This is usually a long-term loan.
  • The cost of credit depends on the own company’s contribution, the risk taken by the bank and the investment itself.
  • An investment loan can be repaid earlier by making an overpayment – however, there are additional costs for early repayment.
  • The required own contribution is 20-30 percent. Some banks offer financing of 90%. investment, but it is usually secured by additional costs for the client.
  • The investment loan is granted for all kinds of investments in the company – fixed assets, intangible assets and acquisition of shares and securities.
  • This type of loan can be granted to a company that has not yet started its activity – so it can be granted for an investment, which is “starting up” a company, if the business plan is well prepared.
  • An investment loan can be taken by start-up enterprises, long-established companies and natural persons.
  • In the investment loan (in selected bank offers) the customer can choose the repayment method – equal installments, decreasing installments or balloon installments.
  • An investment loan may be taken to expand the enterprise’s business or to completely change its profile.

The cost of the loan (or loan) can be included in the cost of business activity. Entrepreneurs often decide to take out a business loan.

However, before you decide to make a loan or loan, it is worth checking whether leasing is sufficient for a given investment – this solution will work if the investment for the company is new cars, and it is much cheaper. The choice of capital financing solution always depends on the entrepreneur.

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