Corporate loan is one of the types of bank lending in which a bank cooperating with a company provides loan products to the employees of this company on more favorable terms. Since the bank's partner company provides the bank with guarantees of the solvency of its employees, the bank does not burden itself with an assessment of the creditworthiness of such customers and a priori considers them to be bona fide borrowers.
Each organization uses the settlement and cash services of a bank to settle accounts with its counterparties. The organization applies to the same bank for lending for business development, uses other banking products. Thus, mutually beneficial cooperation is being established between the legal entity and the bank.
A company that cares about its employees concludes a corporate lending agreement with a partner bank, under which employees of the company can apply to this bank for loans on favorable terms.
Since the employee conscientiously fulfills his work duties and receives a stable salary for this, the company provides guarantees to the bank that this employee is solvent and, most likely, will pay off the loan received.
Such cooperation is beneficial to everyone. An employee can take out a loan and, with conscientious work at this enterprise, will successfully pay it back in the future. The company gains confidence in the loyalty of its subordinates: the ability to easily and quickly take a profitable loan motivates a person to work at this company quite well. And those who have already taken advantage of corporate lending receive an additional incentive to work at this enterprise, at least until the full repayment of this loan.
The bank receives a stream of solvent customers who are guaranteed to fulfill their loan obligations. Thus, the credit institution significantly reduces the risks of loan defaults.
Undoubtedly, corporate lending provides a certain framework that the organization and the bank establish for their employees. For example, they limit the maximum possible loan amount provided in the framework of corporate lending. Or they set a certain period that a new employee must work before he can take advantage of corporate lending.
In order to receive a corporate loan, an employee must agree in advance with the management of the organization on a loan guarantee. In addition, he must have citizenship of the Russian Federation, permanent registration and is of working age at the end of the loan term (60 years for men and 55 years for women). Individual banks can set their own age limits for corporate clients. For example, many banks see their corporate borrowers at the age of at least 21 years.
Some banks may require corporate loan applicants to provide a copy of a work record certified by the employer, a statement of income or a letter of guarantee from the management of the company. It all depends on the credit policy of each particular bank.
The purposes of corporate lending are most often the personal needs of the borrower. Although large corporations often negotiate with partner banks to provide their employees with auto loans and mortgages as part of a corporate lending agreement.
