In addition to a business loan, there is another form of business financing: business credit. The difference between these two forms of credit is very important. A business credit can be seen as an amount that is already available at the bank. This amount can be withdrawn up to a fixed limit.
The borrowing party decides when an amount is withdrawn and how much it is. Interest must be paid on the withdrawn amount. Business loans are therefore one fixed amount that is (partly) drawn when the borrowing party needs it, as long as the term lasts.
A business credit can be applied for by an entrepreneur when a large one-off payment has to be made. One of the most important aspects of a business credit is the interest rate. Because it can differ per lender, it is always good to compare the different providers of business loans.
Apply for and take out business loans
After comparing the different business credit providers, a business credit can be requested. In most cases this is not a difficult process, but it depends on the amount borrowed. There are providers who provide up to 250,000 euros online. Above that amount, there are often several steps involved, for example a conversation with the lender itself.
After applying for the business credit, the provider will look at a number of issues, including:
- The industry in which the entrepreneur is active;
- The entrepreneur’s experience;
- The financial health of the company;
- How much money is borrowed and what it is for.
When the application is approved by the lender, the amount of money will be with the provider after a short period. From that moment on, the entrepreneur can dispose of the business credit.
Calculating a business credit
Costs are involved when taking out a business loan. In addition to the amount to be repaid, more costs will be charged. Interest is an example of this. This is only calculated on the amount withdrawn. Often this percentage is between five and nine percent.
This interest is spread over different periods. As time goes on, the interest rate decreases. How much is repaid in the month can be determined by yourself. This repaid amount can then also be withdrawn.
Information about a revolving credit
A business revolving credit is a loan in which the entrepreneur can withdraw money at any time. The limit that was agreed upon before taking out the loan applies. A difference with a ‘normal’, short-term business credit is that no end date is agreed. There is therefore no term to maturity with a revolving business credit.
A revolving credit is suitable for entrepreneurs who want more financial space and are not bothered by the variable interest rate and flexible term. Revolving credits are often requested for a long-term vision, for example the construction and maintenance of a fleet.
Frequently Asked Questions
What is a business credit?
A business credit is a loan in which the borrowing party decides when the money is withdrawn and how much is withdrawn. Where the amount for a business loan is paid out in full at the beginning, the amount for a business loan remains with the lender. The borrowing party decides when an amount is to be withdrawn. Interest is then determined on the withdrawn part.
For whom is a business credit suitable?
A business credit is suitable for anyone who wants to make a long-term investment within the company. A business credit can be applied for by entrepreneurs with a VOF, a sole proprietorship or a private company, after which it is checked whether they qualify for this. The lender then tests the creditworthiness of the borrowing party.
How do I apply for a business credit?
You can apply for a business loan from a lender. It is useful to compare the different lenders in advance, because important aspects can differ per provider. It is often possible to apply for a business credit via the internet. The application will be approved or rejected, based on, among other things, the financial health of the company. When the application is approved, the money will be available to the lender after a short period of time.
How much is the interest on a business credit?
The interest on a business credit differs. This interest depends on, for example, the creditworthiness of the entrepreneur. The desired term also influences the interest rate. In addition, the interest on a business credit is not fixed, but variable. This means that this percentage can fall or rise during the term.
What is a business revolving credit?
A business revolving credit is a credit for which no end date has been set in advance. This means that there is no term to maturity for the loan. In this case, the borrowing party can withdraw money as long and often as it wants, as long as it is repaid. This form of credit is often used for long-term renovation.