The loan consists, for a natural or legal person to apply to a credit institution for the provision of a sum of money for a specified duration and rate. This transaction is materialized by a contract concluded between the borrower and the lender.
Beneficiaries of the bank loan to companies
All companies whatever their legal form, artisans, associations, liberal professions etc. The company must however meet solvency conditions: a deposit will be required to guarantee the investment made by the bank.
The main sectors eligible for bank lending to businesses are:
- car trade;
- wholesale and retail trade;
- hotel catering,
- services to individuals and businesses;
- continuing education and other teaching activities;
- ambulances, medical analysis laboratories;
- help centers through work, sheltered workshops;
- collective, social services;
- recreational, cultural and sporting activities;
- liberal professions etc.
The acceptance of the bank loan to companies is based on the APE code of the company, a code that characterizes the main activity of the company.
Bank lending to businesses
These bank loans are distributed by all credit institutions that freely set rates and fees.
In most cases, the lending bank will require the creator to have his current account (with salary domiciliation) at home.
Minimum personal contribution
Although banks display differences in how loans are awarded, they generally all require the creator (s) to raise at least 30% of the firm’s sustainable needs. This amount varies according to the level of risk of the activity.
These sustainable needs include:
- start-up costs: these are the expenses incurred to establish the business (registration fees, consulting fees, etc.);
- expenses related to intangible assets: legal and administrative expenses (filing of patents, legal notices, etc.), expenses related to premises (rent in advance, agency fees, leasehold rights, etc.), expenses advertising (commercial brochure, etc.);
- expenses related to tangible fixed assets, corresponding to material investments, such as machinery, computer equipment, furniture, vehicles, layout costs, etc.;
- the need for working capital (WCR) to finance the first months of activity.
An absence of own funds will be deemed unacceptable by the banker responsible for studying the business plan of the company. In such a case, it may be very useful to apply for a loan of honor from specialized organizations.
Features of the bank loan
A bank loan consists of several data:
- the amount borrowed, or capital;
- the interest rate. It is freely fixed by the banks and can be fixed or revisable. It varies according to the “risk” presented by a project;
- the duration and level of monthly payments.
Duration of the bank loan
The term of the loan varies from 5 to 12 years, depending on the nature of the property, its depreciation period and the company’s ability to repay. The repayment may be monthly, quarterly, semi-annual or annual. There is the possibility to defer repayments up to 12 months.
The interest rate is based on the term of the loan and generally agrees with the interest rate applicable to the Business Creation Loan. The rate is revisable according to the remuneration paid to the Sustainable Development Booklet.
The business bank loan is granted under certain guarantees (guarantor’s or partners’ guarantee, real guarantee, etc.). The credit mediation system opens up to creators and buyers of companies. Trusted third parties are now at the disposal of project promoters who face difficulties of financing by the banks.
In addition, the creation services of Chambers of Commerce and Industry of Paris can help the creators in their approaches, by advising them and by validating their files. They are only there in an accompanying role.
The interest of the bank loan to companies is deductible from the turnover for the expenses and charges which come in reduction of this one. The deduction of interest must be made on the results of the year in which they ran.
To facilitate access to the Business Banking Loan, OSEO has put in place a bond under the name of “Financement et Garantie OSEO”.
Obtaining the bank loan
1. You must first go to a banking establishment: they are all entitled to ask the bond of OSEO except La Banque Postale.
2. Thereafter, it is the bank itself that requests the surety of OSEO and takes care of filling the file for this purpose. At this stage, the bank has therefore agreed to grant the bank loan and OSEO automatically agrees to guarantee it. Be careful however, OSEO does not guarantee 100% of the loan and the bank will therefore ask for personal guarantees to the manager that can take several forms: pledge, pledge etc.
Note: when accumulating loans, OSEO can vouch for the plurality of loans contracted up to 70% during the first three years of the company’s creation and then up to 50% beyond.