Business lending is the most promising direction in lending. This is a service for enterprises, individual entrepreneurs, representatives of small businesses involved in production, provision of services, in trade.
Instructions
Step 1
One of the main aspects in business lending is its purpose. Banks and other credit organizations provide loans for opening and developing a business, purchasing working capital, equipment, transport, other movable and immovable property, and diversifying production.
Step 2
Lending can be carried out through the issuance of a loan, line of credit or overdraft. A loan is a one-time credit of the amount to the borrower's account. It is most convenient if the direction of spending is known in advance, for example, the acquisition of technological equipment.
Step 3
Unlike a loan, a line of credit is provided in tranches, i.e. parts. Here, in the process of business lending, the main aspects are the amount and duration of the line, as well as the issuance limit and the debt limit. A credit line is the most convenient option for those businesses that need additional spending for a certain period of time. Overdraft is a form of lending to a current account, in which the borrower receives funds for it until a certain limit is reached.
Step 4
In the process of business lending, enterprises and individual entrepreneurs are provided with long-term and short-term loans. Long-term loans are loans that are provided for no more than 5 years and are aimed at the acquisition or construction of real estate, expensive equipment and machinery. Short-term loans are loans for the purchase of working capital, transport, cars. They are provided for less than 5 years. Some credit institutions refer to short-term loans only as those provided for a period of up to 1 year, and loans for a period of 2-5 years are considered medium-term.
Step 5
Business lending is a fairly promising area of banking activity. After all, the amount of loans is an order of magnitude higher than those provided to individuals. However, the risk associated with such transactions is high. Therefore, banks, as a rule, impose strict requirements on their clients: having their own capital and a steadily developing business.
