Choosing credit for your business | Finance Guide

An entrepreneur always require finance either for starting the business project, or to strengthen and expand its business.

The vast majority of the time, it will be necessary to go to a financial institution for a loan business. But, as in this market there are many possibilities, the most convenient is that you avoid making a hasty decision and meditate your choice of financing. The comparison should be your method.

When evaluating and comparing different banks or financial institutions can grant you credit required, it is essential that you review a wide range of factors to choose the most appropriate financial offer to your business. Here we present:

Analyzes the use

Is important to define what is to be used (working capital, remodeling, real estate acquisition, growth) because it depends on the type of loan you should look.

Check if you are eligible for credit

Some banks evaluated only cash flows and other companies assess their ability to pay, based on their financial statements. If your financial structure is not very well, the options are reduced.

Identifies the bench area to which you?ll return

Within banks there are different types of banks that provide services to businesses according to their sales.

The total cost

Of the credit characteristics analyzes. The total cost of financing, known as cost effective, is the most important criteria that you should observe when comparing the different alternatives.

This element refers to the true rate you will pay on the loan, and is composed of the interest rate, plus additional costs are usually included in the loan, such as fees or maintenance grant.

The term

Is the period of time gives you the financial institution to repay the loan and pay interest? To choose according to your ability to pay, you will understand the following: a shorter term, generally lower interest rate but higher fees to pay, while if the time is greater, the interest rate will also be, but pay lower fees.

The exchange rate

Fixed rates remain constant during the life of the loan period, variable rates are adjusted according to certain parameters, and combined rates being fixed rates usually start before becoming variable rates.

Fixed rates possible to know in advance what fees and therefore give control and the security of knowing how much they are going to pay. While rates have uncertain variables which may increase at any time, but usually is less than the fixed rate.

Amortization System

This points the way to be amortized capital and, therefore, pay the loan. The method used is French, where the fees are fixed and in all periods is paid the same fee.

Early cancellation

Also consider if the credit gives you the possibility to make additional payments in order to reduce debt, or to cancel ahead of the deadline given.

Financial institution

Assesses its customer service available to provide all the information you require, their ability to address any concerns you have, it?s rapidly to evaluate the application and to grant you the loan, among other things.

Credit history

Is recommended to buy the products of financial institutions which are already customers, in order to form a good credit history and thus gain access to credit later with better facilities and benefits.

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