Loans are currently the solution chosen by many businesses when looking for additional capital for their financial strategy. So, what are the forms of business loans and what are the current procedures for business loans? Let's learn more about this loan activity with SeABank.
The role of bank loans in business operations
Bank loans play an important role in business operations of enterprises, specifically as follows:
Increase investment capacity
- Bank loans provide a strong enough financial source for businesses to invest in projects, equipment, materials, and human resources that are important for development.
- Strong investment capacity helps businesses expand their scale, improve product and service quality, thereby increasing market share and creating new opportunities in the market.
Increase capital efficiency
- Loans help businesses take advantage of financial leverage, through investing in projects with higher rates of return than loan interest rates.
- Using financial leverage helps optimize profits and increase profitability, helping businesses achieve better financial performance.
Increase solvency
- Loans help businesses pay off short-term debts and maintain positive relationships with partners, suppliers and employees.
- Maintaining solvency also keeps the business stable, reduces risks and enhances reputation in the market.
Loans provide useful financial solutions for businesses
Popular forms of business loans today
The popular forms of business loans today can be classified into two main groups as follows:
Short-term loans to supplement working capital
This is a group of short-term bank lending products for businesses, to meet the need for additional working capital for the business's production and business activities. This group often includes the following forms:
KHDN Overdraft
Business overdraft is a loan service of a credit institution, allowing business customers to spend beyond the available balance in their payment account. ValueThis amount is called the overdraft limit., and when the customer uses it,bank Interest will be applied to the amount of money spent exceeding the actual amount in the business's payment account at the Bank.
Overdraft services are often designed to support start-up businesses, especially small and medium-sized enterprises.Short-term overdraft limit usage period, maximum about 12 months.
An overdraft will allow a business to spend beyond its available balance.
General short term loans
This is a group of short-term bank lending products for businesses, to meet the need for additional working capital for the business's production and business activities. This group is often considered a part of the business's short-term capital, used to meet needs such as purchasing raw materials, paying salaries, paying debts,....
Short-term loans by industry
Short-term loans by industry for business customers are a form of bank lending to businesses, with a loan term of less than 12 months, classified according to the business sector of the business.
Each business sector has its own characteristics, therefore, banks will have their own regulations on conditions, interest rates, procedures,... for short-term loans by sector.
Trade finance
Trade Finance is a form of commercial lending that acts as a payment bridge between buyers and sellers in business transactions. This form supports importers and exporters in conducting commercial transactions.
Trade finance loans are often used in import and export.
Medium and long term loans
Medium and long-term loans are a form of bank lending to businesses, with a loan term of 1 year or more. This group of business loans can include the following types:
Car Loan
Car loans are also a form of bank lending to businesses.to help businesses purchase cars to serve diverse needs (business, transportation,...).
For this type of loan, businesses need to carefully consider factors such as capital needs, financial capacity, loan interest rates, loan terms, etc. before deciding to take out a car loan for corporate customers.
Fixed Asset Investment
Fixed Asset Investment Loan is a form of finance provided by banks to support businesses in investing in fixed assets such as machinery, equipment, factories and other assets.
During this process, the bank and the business will agree on the terms and conditions of the loan.Enterprises must commit to fully repay principal and interest to the bank.
Fixed asset investment loan term is usually 1 year or more.
To be approved for a loan, businesses need to detail the purpose of using the capital, such as increasing fixed assets, expanding the business model, or increasing charter capital. In addition, businesses need to provide full information on related documents, growth strategies, and detailed and valid development plans.
Project investment
Project investment loan is a medium and long-term loan product for businesses to carry out new investment projects or projects to upgrade and expand production and business.
Enterprises can borrow to invest in projects to expand production and business.
Conditions, documents, procedures for business bank loans
The specific conditions, documents and procedures for borrowing capital for businesses will depend on each bank and financial institution. However, you can also refer to the information below to answer this question.
Loan conditions
Business loan conditions at banks are often regulated by each financial institution, however, in general, they often include the following basic conditions:
- A business is a legal organization with a valid business license.Validity.
- Enterprises need to have stable business operations, provide complete and transparent financial reports to assess the financial situation.
- Enterprises need to have at least one specific and reasonable plan for using borrowed capital.
- Ensure the business is reputable and complies with debt regulations.
- Comply with specific regulations appropriate to the characteristics of the product or industry in which the business operates.
Loan application
Loan application usually includes the following main parts (refer to regulations at SeABank):
- Legal documents.
- Documents on capital usage plan, investment plan,...
- Financial records.
- File TSBD(collateral).
What a loan application includes will depend on the regulations of each bank.
Loan process at SeABank for Enterprises
Nowadays, there are many banks offering business loan packages, notably SeABank - one of the banks with the leading service quality in Vietnam, providing a variety of financial products and services for corporate and individual customers.
In particular, SeABank's business loan service is highly appreciated for its product diversity, competitive interest rates and simple procedures. Specifically, SeABank's loan process includes the following steps:
- Step 1: Customers need to prepare and provide complete documents as required by the bank.
- Step 2: SeABank will conduct the application appraisal process, and the decision on loan approval or rejection will be made based on the bank's criteria and policies.
- Step 3: Complete the loan agreement procedure (Credit contract)if the application is approved.
- Step 4: After the Credit Contract is signed, SeABank will disburse to corporate customers.
- Step 5: After disbursement, SeABank often conducts post-loan checks to ensure that the loan is used for the right purpose and the customer complies with the terms of the Credit Agreement.
The loan process and procedures at SeABank are very simple and flexible.
Things to note when borrowing business capital
When deciding to borrow business capital, there are some important things to keep in mind to ensure the borrowing process is more efficient as follows:
- The business industry needs to clearly identify your loan needs before loan. Clearly identifying loan needs will help businesses choose the right loan product and calculate the required loan amount.
- Compare loan interest rates between banks to choose the appropriate interest rate. In addition to loan interest rates, businesses also need to consider other factors such as loan term, collateral, fees that may arise during the loan process,...
- Choose a reputable and trustworthy bank, and check out the incentive programs the bank offers for businesses.
- To increase the chances of a successful loan, businesses should detail the purpose of capital use and outline a clear and specific capital use plan to convince the bank of the feasibility of the project.
- Provide evidence and documents proving the enterprise's ability to pay, purpose of capital use and debt repayment..
Businesses need to clearly identify their needs before wanting to borrow capital.
Conclude
Business loans are an effective financial solution to help businesses meet capital needs for production and business activities. However, businesses need to carefully consider factors such as capital needs, debt repayment ability, loan interest rates, loan terms,.... to choose the appropriate loan solution and use the loan effectively.
If you are in need of a business loan, please contact SeABank immediately for the best advice and support. SeABank offers a variety of business loan products with competitive interest rates, simple procedures, and quick disbursement time.
For more information about business loan services at SeABank, please visit the website or contact Hotline 1900.555.587 (Customer Service) or 1900.599.952 (Business Service).
