Business credit: how to obtain it and what are the advantages for your company?

A business running, particularly in, requires knowledge of management and planning, especially in finances. On the side of the entrepreneur, it is a big help to get business credit to make the business grow.

After all, getting resources is not always an easy task, as an institution usually requires guarantees besides charging high interest rates, which may end up giving a headache to the entrepreneur. To help you, we are going to show you how to obtain business credit in this article; follow along!

What is business credit?

Business credit is the facility extended by a financial institution to an enterprise. Similar to a form of loan, it involves a mutual agreement by parties with pre-specified terms on credit amount, term of payment, and interest rate.

Entrepreneurs may need credit to open their company, to overcome financial difficulties or even to invest in the business.

However, depending on the purpose of the loan and the industry the firm works in, the credit lines and conditions for business financing for ME, or microenterprises, might differ significantly.

Principal categories of loans for businesses

Prior to learning how to get business credit, you should be aware that there are several kinds of credit available, based on the requirements of the firm and the entrepreneur. Examine the primary ones.

Financing

One of the most common credit models, financing can have different terms and conditions and is almost always aimed at purchasing assets for the company, such as real estate or vehicles.

Special check

The special check is famous mainly for its easy access, since it is visible in the company’s bank account as a margin in addition to the balance. The amount can vary greatly depending on the company’s financial transactions and its use or withdrawal is completely immediate, without analysis or forms.

However, it is good to keep an eye on this type of loan for small and medium-sized companies , as all this facility usually has a very high cost. The interest rates are very high in this model, so it may not be the most recommended.

Therefore, remember to contact your bank and find out about this process, its values ​​and deadlines granted to pay off your debts.

Secured account or working capital

This modality is one of the most expensive for companies and is usually only recommended for short-term debts, as it has short terms that almost always do not exceed one day.

It works in a similar way to an overdraft, that is, the bank or financial institution grants a pre-approved limit for a withdrawal for the entrepreneur to use, which can quickly pay off smaller debts, such as suppliers and other expenses.

Secured loan or collateral loan

Here, the applicant is required to present some asset, such as a property or vehicle, as collateral to pay for the loan operation in the event of default, and, in return, the interest rate is lower. This model is most commonly used for higher-value loans, such as renovations and construction.

Anticipation of receivables

If your company has made a sale on credit to be received in the next three months, for example, and you need this amount in advance, you can use the anticipation of receivables and obtain these payments in advance without having to charge the customer.

What are the advantages of obtaining credit for the company?

We already know some of the main lines of business credit for companies, but what are the advantages of this process?

Even with interest and bureaucratic forms, the loan can also be beneficial for your business, because:

• part of the amount paid in interest on loan installments can be reviewed by companies as a refund on their Income Tax;
• a loan can generate a lot of predictability for cash flow and, therefore, the value of the installments can be fitted more easily into the business budget;
• Credit can be an important part of boosting your business.

A business loan, if organized and planned correctly, can quickly lead your business to positive results far beyond expectations.

However, remember that this resource is not yours, okay? So, don’t see it as easy money, but rather as an important strategy to leverage the success of your company.