Credit for the self-employed & small businesses

A corporate/business loan is a type of loan that financial institutions can provide to companies of any legal structure. It allows companies to establish their business, fund their expansion, undertake significant projects, or address liquidity issues. When companies seek a business loan, they are required to provide reasons for their loan application and outline their objectives for the funding they receive.

The different types of business loans available cater to small, medium-sized, and large companies:

Overdraft:

An overdraft loan allows individuals or businesses to withdraw more money than they have available in their bank account, providing a short-term solution to bridge financial gaps and cover expenses.

Standard business loan:

A business loan is a financial arrangement in which a lending institution provides funds to companies of different legal forms, such as small, medium-sized, or large enterprises. This type of loan serves multiple purposes, including facilitating business establishment, financing growth initiatives, implementing substantial projects, or resolving liquidity challenges.

When a company applies for a business loan, they are required to justify their loan request and provide a clear explanation of how they intend to utilize the received funding. The loan typically operates on the basis of a contractual agreement, regulated by relevant legal provisions such as the German Civil Code (BGB) sections 488 to 490.

Business loans remain a favored financing option for businesses, though obtaining approval from banks can be challenging. Banks prioritize minimizing the risks associated with business failures and thus conduct a thorough assessment of creditworthiness. In addition to a solid business plan and a deposit, banks often demand tangible collateral, either in the form of company assets or shareholder assets, before granting a business loan.

Start-up loan:

A start-up loan is financial support provided to entrepreneurs who are starting a new business. It can be in the form of a conventional loan or a government subsidy, helping cover initial expenses. Requirements usually include a well-structured business plan, good creditworthiness, and potential collateral.

There are other financing options for founders as well, including securing funding from business angels, investors, or crowdfunding campaigns.

Factoring:

Factoring is a financing option for small businesses to enhance cash flow. It involves selling trade receivables to a specialized organization, known as a factor, which assumes responsibility for collecting the debts. Factoring not only addresses short-term financing needs but also mitigates the risk of unpaid invoices.

To apply for a business loan with Qonto’s partners, you will typically need to provide documentation that demonstrates your creditworthiness, such as bank statements and balance sheets.

The specific criteria for financing partners selected by Qonto may vary. Approval for your business financing depends on the following:

• Your company’s founding date
• The date you opened your Qonto account
• Your country of residence
• Your turnover
• Your financial liabilities.
  
  

Other factors that support your creditworthiness, for example, include high growth potential or substantial equity.

It's important to note that meeting the eligibility criteria does not guarantee loan approval, as each partner has the discretion to accept or reject applications based on the quality of submitted documents.

Your loan repayment term will depend on the type and amount of company credit, as well as your company’s creditworthiness and collateral.
With Qonto, it often only takes a few days from filling out the application to receiving the payment, since we can securely transmit the required credit-related financial data to the partner. This saves time and administrative effort.

When selecting the right corporate loan for your business, first make sure you have answers to these questions:

• How much capital do I need?
• How long should my loan term be?
• Which repayment options are best for me?
• What is my creditworthiness rating?
  
  

When you have your answers, you can start selecting from the various partners and offers we have available. To assist with your decision, you can compare financing options online or seek professional advice.

The interest rate for a company business loan is influenced by various factors, most of all creditworthiness. A higher credit rating generally results in a lower interest rate. Qonto's partner financing options span from a daily rate of 0.05% for short-term financing, with rates extending up to 13% based on the loan duration and the company's creditworthiness.

Collateral requirements for corporate loans vary based on financing offers and a company's economic stability. Physical collateral includes real estate, securities, and working capital like machinery and inventory. Personal collateral consists of guarantees and co-debtorship. Distinctions are made between property security, and personal security in determining the types of collateral needed.

The process of applying for and obtaining a business loan is as follows:

1. The applicant company requests funds and submits the financing application to the lender.

2. The lender assesses creditworthiness based on relevant information, including collateral and financial performance.

3. The loan is either approved or rejected based on the company's creditworthiness.

4. If approved, the interest rate, repayment terms, and loan terms are agreed upon. A financing agreement is signed, and funds are disbursed.