A tonic working capital loan other than the account limit associated with the invoice and granted for a certain period of time. After this period, the spinner is extended or the repayment is completed and closed.
The limit granted allows you to use your funds at any time up to the maximum amount. Interest is calculated on the amount used.
What to use a working capital loan for?
Companies deciding on this type of financing need funds for ongoing financing of the company, i.e. for payment of employees’ salaries, purchase of goods and services, payment of Tax Office, Social Security Institution and VAT.
They ensure the liquidity of financing when payment of invoices is late, for example. Such financing also allows the company to grow because we do not have to allocate funds from the financial surplus.
How are the working capital loan released and for what period?
The loan is granted as a limit on the company account. Funds are available immediately after launch. The costs incurred by the company are interest rates per year and possible commission for commissioning.
Rotating payables are short- and medium-term liabilities, which is why they are most often launched for a period of 12 months. After this period, the limit is reallocated or full repayment and cancellation. It depends on us. The bank obviously not
must extend this limit to us.
What are the conditions and amounts for the spinner?
The amounts we can apply for with a revolving loan is up to USD 1mnl (you can do more), but it all depends on the company’s financial standing. Some banks will require collateral in the form of real estate above a certain amount. Other banks impose certain amounts as times the income and usually, it is 1-2 times the annual turnover. So if, for example, we had USD 300,000 of income in 2016, we will get from USD 300 to 600 thousand in the company limit.
The commission is usually 1 to 5% of the amount awarded and the margin depends on the bank and financial documents, however, you must accept this 5-10 % + Capital Lender. What better working capital loan or company loan? Each company should ask itself this question because both commitments are very similar.
The company loan can be granted for a longer period and hence the installment can below, however, we get full funds and pay interest for the whole loan. We use as much as we need at the turnover and pay for its interest. With the current promotion at Good Finance, a company loan can be very cheap because the margin can be up to 3% with a 2.5% commission.