3 ways to get money from the bank - get to know them
Nowadays, banks offer many different ways for the company to obtain the money needed at a given moment. Entrepreneurs can take advantage of the most popular loan, or opt for less frequently chosen but valued solutions - a credit card and an account with a debt limit. How are the different products different and when should you consider using each of them? Learn ways to get money from the bank.
The most popular ways to get money from the bank - credit
The most common way to obtain money from a bank, both among companies and individuals who do not conduct business, is a cash loan. The applicant for funds in this way is required to submit an appropriate application along with a number of documents. On their basis, the bank (depending on the methods adopted) checks whether the customer interested in receiving a loan shows creditworthiness. It is about examining by the financial institution whether the potential borrower will be able to pay off the debt incurred in the future.
When deciding whether to grant (or not) a loan, the bank also takes into account the history of loans taken by the interested party and the issue of timely repayments. If the customer passes the entire verification and checking procedure, the bank grants him a loan for a specific amount, specifying the number of installments, their amount, the amount of interest and the repayment schedule, which must be strictly adhered to.
Due to the fact that the bank wants to have "something" from the loan granted, it is common to charge a commission that is automatically added to the amount of the loan itself, transferred to the borrower's account.
What can speak for this form of obtaining money for your own company? First of all, quick access to significant funds and the possibility of including interest, commission and other expenses related to obtaining a loan as corporate costs. It should be remembered that the capital repayment is not a tax deductible cost.
For the disciplined credit card?
Credit cards are usually associated with the main characters of popular films, who make very successful purchases with the help of their husbands' cards, having fun at the same time. The truth is that this form of fundraising is a nice alternative to credit. You don't have to spend hours filling out applications and looking for a bank that will agree to grant you a loan.
The bank's customer may decide to have a credit card. This is done at his request. Thanks to this, it is possible to obtain additional cash when shopping or after withdrawing it from an ATM. The history and creditworthiness of the customer are also important here, but this time it affects the amount of the limit set on the card. Of course - the better the entrepreneur is in the opinion of the bank, the more favorable the arrangement will be for him.
Practice shows that it is a quick, convenient and cheap form of borrowing money from a bank, but for people who have reasonable funds at their disposal. Together with a specified limit, banks set a repayment period, which may be up to two months. Failure to do so will result in very high interest being charged. As a result, this may lead to a situation where an apparently very cheap loan turns into a rather expensive loan.
The advantages of such a solution include tax issues - all expenses related to the use of a company card can be included in the company's operating costs.
Or maybe a bank account with a limit?
The bank account limit is a product intended for customers with the so-called ROR, i.e. a savings and checking account that is regularly influenced by e.g. salaries. History and creditworthiness are also important here - also in this case they affect the amount of the limit granted.
The account limit is a good solution that constitutes a kind of financial reserve, which allows for the ongoing payment of liabilities, even when there are no funds on the client's account. Of course, you cannot exceed the limit set on the account, but you can use it many times.
This option is very advantageous in economic terms, because interest is charged only on the amount of the loan taken. What's more, the debt is repaid automatically after the first funds are credited to the account, thanks to which the client is protected against unnecessary charging of interest, which in the case of a business account, an entrepreneur can count as tax deductible costs.
Currently, banks offer many products, differentiated in terms of price and cost. Financial institutions outdo each other in loan proposals for clients, ensuring favorable conditions and low interest rates. However, despite everything, when choosing a form of obtaining additional cash, especially for a company, it is also worth paying attention to the deadlines and possible interest on failure to meet the loan agreement.