There are many different forms of loans available. Use your advisors to determine what form might be appropriate for your business.

 

Steps to Open a Business Bank Account

 

 

 

Short Term Loans

An example of short term financing would be a retailer involved in a seasonal business. He may borrow money for 90‑120 days, pay interest during that time, and then pay off the loan in full.

Line of Credit

The entrepreneur can borrow against it when needed, but repayment would be for a longer period of time.

 

 

 

PowerPoints for sale

Smart & Fast

Innovative Entrepreneur

 

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Factoring of Receivables

Here the bank controls the collection of the company's accounts receivable, either through direct deposit or through monthly loans as receivables are presented.

 

Dealing with Banks

4Cs of Commercial Lending

 

 

 

Receiving Credit

This is not seasonal, but for businesses that are in up and down cycles, for example contractors. This type of loan should not be used for the purchase of assets.

 

 

 

Long Term Loans

This would be used to buy assets (trucks, equipment, etc.). The repayment period is usually 3‑5 years. But typically, startup operations have paybacks of 5‑7 years.

 

What Does the Bank Look for in Making a Decision

 

 

 

Combination of Long and Short Term Loans

This is called "the revolver that turns out". Typical uses for this type of financing would be a high growth phase company to help finance receivables or build up inventory. Loan is set up for repayment in 3 years, until the business levels out.

 

 

 

If you don't understand the terminology or jargon of the banking industry, ask the banker to explain. Find out exactly what you are getting into. The borrower should ask lots of questions.


Documentation Required to Process a Commercial Loan

 

Language of Venture Capital

VC Basics

After the Loan: Maintain Good Communication with the Bank

 

 

 

Establish a Good Credit Rating    Relationship Banking