The investment loan is a type of loan aimed at entrepreneurs. Standstill is a step backwards, for this reason, many companies are trying to grow steadily, not infrequently, this growth can only partially be realized from their own resources. The necessary capital to expand or improve the company can be obtained through an investment loan. Even if the entrepreneur might have the necessary reserves, a loan can guarantee liquidity.
What is funded with the investment loan
If a company uses a loan to expand its business, it is called an investment loan. This can be used, for example, to purchase new vehicles, to expand the office space, to create new storage space or to expand the company property. The investment loan should serve to ensure the competitiveness of a company.
The state is also interested in companies growing and investing in competitiveness. As a result, jobs are secured or expanded. Therefore, there are also state subsidies for companies that can be particularly attractive. Investment loans from HeW Bank can also be an option. The interest here is not so much on the credit rating, but on the size of the company.
Investment loan and its interest
When lending to businesses, banks try to hedge similar to private borrowing. The creditworthiness of companies plays a major role here. If the company has a good credit rating, the risk of bank default is lower. If the company has a bad credit rating, the bank pays the greater risk on the interest on the investment loan.
If the company takes out an investment loan, the loan amount will usually be used as an investment, which can also serve as collateral. For example, if the company buys a new piece of land or a new property, they can be mortgaged and serve as collateral with the banks. The larger the collateral offered, the smaller the interest rate.
It gets more complicated when the loan is used to acquire licenses or patents. Here it is difficult for the bank to determine an actual value, because the pure purchase price is no real basis and security for the bank.
Key data for the investment loan
The repayment of an investment loan can be made in different ways. On the one hand, a simple installment repayment can be selected, the repayment remains the same but the interest rates rise as the repayment term expires. The result is that the rates are initially higher and later fall. Another redemption option is the bullet loan. Only the interest is paid over the credit period and the loan amount is paid at the end as the final amount.
In general, the repayment term for investment loans is rather long-term. Often the duration of the life of the acquired values is adjusted.