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Business creation: why use a bank loan?

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Many solutions exist and make it possible to finance a business creation project . Among them, we find the traditional professional bank loan . This very old financing technique still has many advantages . It is often attractive financially, especially when interest rates are low. Moreover, it allows the entrepreneur to retain control of his business. Finally, it makes it possible to spread the debt over a horizon defined in advance.

The professional loan allows you to finance your project without losing control

This is the main advantage of the professional bank loan . By choosing to go into debt, rather than bringing investors into the capital, for example, the entrepreneur offers himself the luxury of guaranteeing ownership of his business. He remains the sole master on board and retains absolute decision-making power . A bank loan is not included in the equity of the company, but in the financial debts.

Professional credit is, in fact, an external financing technique . The organization that grants the loan – a bank in general or investors via crowd lending – does not interfere in the management of the company. Its role is limited to lending money . The company, for its part, must reimburse it, on the basis of a schedule defined beforehand between the parties. Along the way, it remunerates the lender for making the funds available.

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The pro bank loan makes it possible to spread the financial debt over a predefined horizon

The professional bank loan is a solution which makes it possible to finance any investment or need for cash, except those in the short term. Thus, it is possible to take out a bank loan to finance investments (machines, tools, vehicle, software, etc.), stocks or even a VAT credit. On the other hand, it is extremely rare for a classic professional bank loan to finance the company’s working capital requirement.

The duration of the reimbursement is generally aligned with the duration of use of the asset . Loans that finance investments – which are called fixed assets in accounting – are generally reimbursed over the long term (more than 5 years). For those who finance inventory, the repayment period is shorter (a few months). Finally, for short-term receivables, it is customary to have recourse to the bridging loan. This concerns in particular the VAT credit.

The professional loan can finance a creation at a lower cost

Recourse to a bank loan is an interesting solution when the conditions are good ( low interest rates ). The remuneration paid to the lender is, in this case, low. In addition, the actual cost borne by the company is even lower, since the financial interest is deductible from the tax result. Debt therefore generates tax savings on profits , depending on the company’s tax rate (25% in the case of corporation tax).

In general, the loan is less expensive for the company than the financial lease or rental . In the latter, the three-way relationship between the company, the supplier of the good and the financial establishment (lender) generates additional costs. This feature makes the loan more attractive, but less flexible. The company is, in fact, the immediate owner of the property and does not have the possibility of returning it to the organization.

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