Starting your own business often requires more money than you own. If your equity is not sufficient, you will have to take out a business loan or another type of business financing. What types of loans for companies are there, what are the advantages, disadvantages and conditions of corporate financing, supplier credit and the subordinated loan for companies? Then read on …
A business loan or credit for you as an entrepreneur (self-employed) is many times cheaper than the penalty interest on a business credit card if you have not repaid on time at the end of the month. You often pay around 14% quickly, which is why a business loan is cheaper for you as an entrepreneur. You can also take a higher business credit than if you would pay everything with a business credit card.
Loan for companies: Corporate financing
In most cases you will have to take out a business loan or business loan with the bank. ABN AMRO, SNS Bank, ING and Rabobank offer opportunities for a business loan. It is advisable to request quotes from the different banks to see which business loan is the most beneficial for you.
Loan for companies: Supplier credit
The supplier credit is the most common form of corporate financing. The supplier provides credit in the form of a payment term, which varies from months to years. The advantage of the supplier credit is that the liquidity of the company is not compromised. The duration of the supplier credit is one month.
In certain sectors, such as the hospitality industry, however, it is common for a long-term supplier credit to be issued with the obligation to purchase from the supplier in return. A good example of this is Heineken, capital powerful enough to provide loans to starting entrepreneurs with the obligation to sell Heineken beer.
Loan for companies: Private loans
Private loans are concluded between private individuals, without the intervention of a bank. It is wise to put agreements on paper about interest, duration, repayments, etc., so that there is no disagreement about this later.
Loan for companies: Subordinated loan
A subordinated loan is a credit whereby the creditor is subordinated in the event of the debtor’s bankruptcy. The creditor takes the last place in the order of creditors in the event of bankruptcy. Subordination of a loan must be laid down in a contract.
The disadvantage of the subordinated loan is that the creditor runs the risk that he will not be reimbursed (part of) his loan. That risk is usually compensated with a higher interest rate.
Subordinated loan for companies
Subordinated loans are only granted by and to companies. The providers of the subordinated loan are parent companies or large banks that have a clear view of the risk. The government often provides subordinated loans as a form of subsidy.
Loans to starting entrepreneurs: venture capital
For private individuals it is fiscally attractive to lend money to starting entrepreneurs with a so-called venture capital. Entrepreneurs do not benefit directly, except that it makes it easier to borrow money. This is because the lender receives a tax credit on income tax and the loan amount is, to a certain extent, exempt from the capital gains tax for the first eight years.
Starting a company from a benefit
Entrepreneurs who want to start a business on the basis of benefits may be eligible for a start-up credit from the UWV.
- The UWV can also act as a guarantor at a bank or other financial institution: this is called “guarantee”.
- Unemployed people who receive unemployment benefits or unemployment benefits may be eligible for a start-up credit.