Both a small and large company needs money both for starting a business and for later expenses. The functioning of the company is associated not only with profits, but also continuous expenses. Financing small enterprises is much more difficult than large ones. First of all, the reason is that small businesses simply have fewer opportunities to finance their expenses.
However, banks do not close the road with any entrepreneur. Therefore, they also offer assistance in financing small enterprises. Depending on the purpose of the loan, they offer a different solution. However, not only the size of the company affects the amount of credit. The amount of funds allocated to finance small enterprises also depends on the condition of the company. The better it thrives, the more financial resources it can count on. Ban, making available funds, has in mind whether we are a good business partner and whether we will be able to repay the commitment. Credit is the most frequently chosen solution for financing small enterprises.
One of the loans available on the market for financing small enterprises is a working capital loan. It is intended for the company’s current expenses. It is a short-term loan taken out to cover the current financial liabilities of the company. The loan period is usually between 12 and 24 months. Small enterprises use this form of financing, e.g. to ensure financial liquidity of the enterprise, so as not to fall into unnecessary debt during a temporary crisis or downtime.
It is a form of financing small enterprises which aims to finance the costs of assets that will positively affect the development of the company. The investment loan is used to finance mostly long-term investments. The loan period is much longer than in the case of a working capital loan. Is even 15 years. The loan capital that we can receive from the bank is also much larger than in the case of working capital loan. However, this is a commitment for the company for several years.
The latest form of financing small enterprises is leasing. While this form is not new in itself, only large companies could apply for it at one time. Today, however, banks, meeting the needs of small businesses, can also offer leasing to them. It also happened thanks to the popularity that leasing gained and the wide range of clients it gained in a short time.
The leasing contract assumes that one of the parties to the contract will hand over a specific item to the other party to the contract. On the other hand, when entering into a leasing contract, it undertakes to cover the monthly usage fee until the total value of the goods is repaid.