Business credit: how to choose?

Among the multitude of proposals on the market, here are the keys to finding the one that best meets your needs.

Self-employed professionals, shopkeepers, self-employed entrepreneurs, farmers, craftsmen, VSEs, SMEs, SMIs and associations can all benefit from business loans from any banking establishment.

Despite the emergence of new, alternative financing methods, bank financing remains the most popular choice for business owners.

They can be used to launch a new business, purchase equipment, renovate premises, temporarily boost cash flow, buy back shares or develop a new export project, for example.

Business loans usually follow the usual pattern of providing a sum of money in return for interest and repayment of the capital at regular intervals.

However, there are many specific features depending on your status, your objectives and your project.

Who should I contact for a business loan?

The first step is to call on your personal bank, or your professional bank if your business is already up and running.

Take advantage of the competition by contacting several banks and comparing offers.

If your time is limited, credit brokers can search for the best financing offers available to you, work out the best strategy in collaboration with your advisors, optimize the negotiation of the terms of your loan, and take care of the formalities involved in putting together your financing file.

What steps do I need to take?

Even before finding out about loan offers, you need to put together a financing file to convince your financial partner to respond positively to your expectations.

It must answer your banker's 4 priority questions:

• Is your company solvent ?
• Is your project solid enough to merit financing?
• Will you be contributing to the financing through a direct contribution from the company?
• What guarantees do you offer?

You will also need to detail the circumstances of your project, its objectives and how the loan funds will be used.

It must also include a number of administrative documents, such as the company director's identity document, a Kbis extract justifying the company's existence and main characteristics, proof of address and bank statements.

Collateral requirements may vary from one bank to another, and each is free to set its own lending conditions.

Business loans can be spread over varying periods of time:

• Very short-term: often aimed at bridging a temporary cash shortage, rarely exceeding 6 months.
• Short-term : with an average term of between 2 and 3 years, they enable you to acquire or renew equipment, or finance the expansion of your range of services , for example.
• Medium-term: generally between 3 and 6 years, their purpose is to finance more ambitious projects aimed at reorienting a company's activities, or carrying out innovativeinvestments, for example.
• Long-term : these loans of more than 6 years are often used to finance the purchase of a company, or a large number of shares.

Today's banks offer a wide range of products with specific features to suit a variety of projects: amortizing loans, credit reserves and receivables financing all compete with each other, depending on the bank.

What are the rules?

Before committing yourself to a business loan, check all the charges contained in your contract, especially the interest rate.

The lending institution must not exceed the usury rate

Be sure to provide reasonable guarantees in relation to your company's financial health, so as not to jeopardize its existence in the event of default. Above all, the amount guaranteed must be expressly noted in the surety bond contract, including all additional costs and interest.

If you have taken out liquidity facilities, the bank must give you at least 60 days' notice in writing of any reduction or interruption of liquidity facilities or loans granted to companies for an indefinite period.

Businesses therefore have a wide range of solutions for financing their projects, and all of them generally resort to this type of financing at some point in their existence. Business loan services are undergoing a major transformation, with the emergence of numerous less expensive alternatives such as crowdfunding and leasing.