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Almost daily I am asked: “Why do I have to prove a bank statement for a whole month to get a loan?” Mrs. Demir yesterday: “I think it is a violation of my privacy.”

The same remark from Good Finance the day before: “I decide for myself what to do with my money.” All very logical reactions, but why does the bank want to see it all? And what do they do with that information?

Review of a Good Finance application

When assessing a Good Finance application, a bank makes an estimate of the risk. The biggest cost item of a bank is that they do not get their money back. If they are sure that they will get their money back, they will be able to offer the customer a lower interest rate.

The less risk the bank runs, the lower the interest for the customer. It is therefore in the interest of the customer to share as much information as possible with the bank.

Are payment problems to be expected?

With those eyes, the bank looks at the changes in the bank statement. It is therefore not important at which supermarket you go shopping, how often you go to Good Credits per month or which hobby you have.

Important are mutations that are an indication of (expected) payment problems. Payments to a bailiff, payment arrangements or more are in red than are permitted from these types of signals.

Provide a loan or not

The bank does not want to and may not grant a loan to people who are or are likely to encounter payment problems. Logical, because that is not in the client’s interests. They also prevent being confronted with high (debit) costs. In addition, good customer benefits from a low-interest rate.

Unfortunately, but that is no different, that customer must make a lot of information available for this. Compare it with the Tax Authorities. You also have to demonstrate everything there while you have nothing to hide.

Loan application & privacy

But what about your privacy? The bank is obliged to comply with the Personal Data Protection Act and the Code of Conduct for the Processing of Personal Data by Financial Institutions. This means that they may not use your data for any other purpose than to apply for your loan.

Honesty pays with borrowing money

Viewed in this way, it is therefore only to your advantage to provide all the information requested. Nice to know that it pays to be honest!

There are many reasons to lend money to the company. In many cases, a bank loan is necessary to start the business at all. You then take out a start-up loan from your bank or lender, and use the money for inventory, inventory and other things needed to get the business started. In other cases, it is necessary during periods when the income does not cover the costs, or if you need to invest in an already ongoing business. For example, you may need new office supplies, computers or something else.

Ongoing credit that companies have available to offset periods

This can be, for example, seasonal activities where income varies considerably during the year. There it can be practical with a credit that covers the costs during the off-season and which is then repaid during the high season. In summary, the reasons can be many:

• Do you have a start-up company and need money to cover the first expenses before the company makes a profit?
• Has the business been rolling for a while but lack capital to pay invoices and salaries?
• Need more money to grow the business or to offer a new product or service?

Different types of corporate loans

There are slightly different options when you need to lend money to the company. These are the most common.

Lend money to yourself

As an entrepreneur, you can invest in your own business by lending your private money to the company. You can even charge a reasonable interest rate on the amount. The advantage is that you only risk your own money, which can also be a disadvantage if the company cannot repay the debt. However, you avoid high interest costs and can determine the repayment rate yourself.

Corporate loans from bank or lender

This is the most common type of corporate loan. The loan differs from ordinary private loans in that they are adapted to the conditions of the companies. In most cases, in order to be granted a corporate loan, you need an already started business and you must be able to get up some declarations and budgets from the company. There are lenders and lenders who grant loans without this, but these are in principle to be regarded as private loans where you yourself go into the personal loan for the loan and the interest rates are also higher.

P2P Loans

P2P, which stands for Peer to Peer, is a form of loan where a private investor lends money to companies. This is an interesting form of borrowing that is becoming increasingly popular in Sweden, as the banks and their requirements for the loan are bypassed completely. Instead, you borrow money from an investor where the chances are high to good conditions. It is important to do this through a serious platform that makes sure everything is going right.

Summary

As always, you should carefully compare the options before you take out a loan, and this also applies to corporate loans. Start by reading our reviews on lenders offering business loans and clicking on the lenders you think are interesting.

There are different types of loans for entrepreneurs. Although some forms of entrepreneurship such as startups use alternative financing techniques. The traditional credit circuit has very interesting products to start a business. Do you know them?

Types of loans for entrepreneurs

Public Administrations often have financing programs in place that can be interesting for many entrepreneurs. However, they usually have requirements that condition the activity, so it is interesting to study the calls thoroughly before requesting them.

Outside public credit, private lenders are those that have traditionally nurtured entrepreneurs. The products that they usually offer to entrepreneurs are:

– Credit lines. They work in a similar way to the credit card. A credit to the entrepreneur is precluded to make use of it when needed, charging interest on the money borrowed. This option will allow you not to rely exclusively on cash flow.

– Long or short term loans. Long-term loans are usually more substantial and easy to repay. On the contrary, short-term loans can meet specific liquidity needs, but must be repaid quickly. Its advantage is that you can choose the most appropriate product for your circumstances at all times.

– Mini loans. Microcredits are small loans (usually between 300 and 1000 dollars) that are quickly requested through the Internet. They are popular for their versatility and comfort, although you have to be responsible when requesting them so you don’t end up in debt.

What entrepreneurs need to apply for a loan?

As an entrepreneur, you will not have a problem when accessing small credits. However, it is likely that if you ask for large amounts of money you will be asked:

– Guarantees. It can be personal or bank guarantees. They can also consist of mortgages, which can be established on real estate or intellectual property rights.

– A feasibility study. In most cases the doors to credit are opened if the viability of a project can be documented.

If none of these elements are available, there will still be lenders willing to grant a loan. However, it is easy for conditions to tighten (for example, raising interest rates).

How loans benefit entrepreneurs?

Access to credit is very important for the entrepreneur. It allows to acquire the first elements of the company (local, machinery, software use licenses…).

In addition, throughout the life of the project a loan can help to:

– Balance cash flows.
– Anticipate liquidity to pay payroll.
– Deal with penalties and unforeseen expenses.
– Invest in business improvements.

In short, it is interesting to know the different options of loans for entrepreneurs that are in the market. Few business models can take off if they do not have access to financing. In Ideal Loans, entrepreneurs can find and compare different financing alternatives.

Anyone looking for an instant loan from a private person will quickly find a real instant loan that can only be found at banks. A friend can step in privately with an instant loan, it doesn’t work so quickly via a portal. You can find out more about instant loans and the “acceleration factors” of a personal loan in the article.

Instant credit from private – the essence of instant credit

An instant private loan can be found in advertising. All major portals for personal loans advertise with the catchphrase “instant loan”. After clicking on the credit description, the provider statements are already extremely vague. Instead of admitting that there is no instant credit from the private sector, the portals are evading. The term can only be found in the landing zone. At the latest in the bank there is only talk of credit. The reason for this is simple:

A real instant loan, usually a small loan, is decided directly by a lender under simplified examination requirements. This lender reviews the application and makes a decision. The loan is then paid out on the same booking day or on the following next booking day. In the case of a real instant loan, there are two to three working days between receipt of the application, loan processing and payment.

Instant credit from private donors – the normal process

With all private loan offers, outside of the circle of friends, many individual approvals are necessary. The loan is only payable if the number of bids is sufficient. A personal loan is often composed of 20 or more loan offers. Often, even the final interest rate is not known by the end of the bidding process. With a view to an optimal interest rate, many lenders “gamble”. It is the last few seconds that make a final decision about the interest rate.

With the best creditworthiness and credit protection, the interest is reduced if the number of bids exceeds the credit requirement. It is in the interest of the borrower to get as many bids as possible. So the borrowing rate falls. An average credit approval, with normal creditworthiness, takes about 20 days.

The processing time for instant credit from private, compared to a “real instant loan”, is already tenfold. Now the money still has to be collected by investors. The loan can only be paid out once all the funds have reached the paying bank.

Make a leg of personal credit

Additional donations can be given to the loan from private donors in a number of ways. First of all, all certificate offers should be used. Banners and a good credit description ensure investor interest. Speed ​​is a question of money.

A small loan amount, additionally secured, for example, by the vehicle, can be financed quickly. The interest rate offered by the borrower can also ensure quick bids. Nevertheless, the following applies: An instant loan from a private person is, in rare exceptions, almost as fast as the instant loan from an online bank.

Despite falling unemployment figures, there are a huge number of people in Germany who are dependent on state subsidies or even full care and are therefore known with the infamous name “Social Welfare”.

Since Credit bureau keeps the relevant data for a period of three calendar years even after this condition has ended, the number of people affected continues to rise. Nevertheless, there are also legal opportunities to obtain an instant loan despite negative Credit bureau and Social Welfare.

Private loans:

Unfortunately there are many black sheep in the area of ​​private moneylenders. Therefore, companies that advertise in the newspaper should be advised against, as unpleasant surprises can occur. However, most people with an intact family and an intact social life can also borrow money with friends and acquaintances.

Although this costs overcoming and is certainly associated with the fact that you actually have to answer unpleasant questions, it is the quickest and usually cheapest way to get a smaller loan immediately.

Guarantor:

An instant loan despite negative Credit bureau and Social Welfare can be realized at a bank through a guarantor. The guarantor guarantees with his or her perfect creditworthiness for the proper repayment of the loan, so that no questions are asked about the actual borrower.

Such guarantors are also preferred among friends and acquaintances; it is strongly advised against people who offer services on the Internet that have to do with providing guarantees for strangers. 

Valuables:

Even people who purchase Social Welfare often have valuables. These can be deposited with a pawnbroker as security for the value of the items, whereupon an immediate loan is granted to a certain extent despite negative Credit bureau and Social Welfare.

Such pawnbrokers are often of a governmental nature, so that a real value is estimated and, less usual loan interest, is paid out in cash. If the deposit is not released within a certain period of time, it expires and is put up for sale or auctioned by the pawnbroker.

The economy is running, companies are investing. But earnings in the corporate banking business of banks and savings banks are stagnating. The margin decreases as the credit volume increases.

Studies and research on trends and developments in corporate banking, including corporate and investment banking.

At almost 1.1 trillion dollars, the credit volume reached a new record in the first half of 2017. While savings banks and cooperative banks have been able to expand their business in the past five years, GoodVines Bank has lost market share.

Decline in earnings and profitability

The management consultancy CoolFund & Company publishes an analysis of the corporate banking business of German banks every six months. The analysis covers around half of the total assets of the 100 largest banks operating in Germany and focuses on financial institutions with a focus on corporate banking and corresponding segment reporting.

The CoolFund Corporate Banking Index even declined slightly in both dimensions, earnings and profitability, compared to the previous year.

The high level of competition in a historically low interest rate environment prevents banks from benefiting from growing corporate credit demand.

The return on equity before tax (RoE) continues to crumble. This key figure has dropped significantly since 2012 and is now 12 percent. The banks still earn their capital costs in the corporate customer business, but they are far from the previously accustomed returns of 20 percent. Income and profits stagnate in the German corporate banking market

The credit margin in particular is suffering from fierce competition and the sometimes very ambitious expansion plans of major international banks in the German market. At 1.3 percent, the margin is now back at the level of the crisis year of 2008. At the same time, the share of low-margin new business in the loan portfolio has increased significantly.

Credit margin declines to 1.3 percent, close to a ten-year low. However, there are differences between the institutes. However, some institutes are able to counteract this. They focus on profitable customer groups and increase cross-selling. On a broad front, such successes in commission business are still the exception.

Historically low loan loss provisions

In view of the good economy, credit risk provisions at credit institutions are currently below the historical average. Compared to the previous year, this dropped significantly again in the first half of 2017. According to the authors, however, it is only a matter of time before the credit cycle changes. Higher loan loss provisions would then further burden the tense earnings situation.

Saving costs and customer selection

For this reason, the institutes started saving programs some time ago, resulting in a stabilized administrative burden. Many banks continue to work on reducing costs and strengthening customer selection. However, it is still often difficult to withdraw from entire industries, regions or product groups.

Recently, we have seen that several lenders have changed their fast loans. Lendscan and the Loan Stared, for example, removed their shortest term of 1 month, which means that you can only put up your loan for 61 days or three months with them. In addition, Lendscan recently began offering online credit in addition to its sms loans, just as Letlend Credit does. Since then, VIA SMS Group (which is behind the sms mortgage company ViaKredit) has also launched a new brand under the name Viakredit which only offers online credit, one that has become more common since last fall.

Are credit companies preparing for the fall?

There are, of course, several reasons why credit companies have started to change their products. One reason is that online credits can provide better returns than sms loans. This is because they can be paid off for a very long time and the borrower can use the credit again. However, for you as a borrower, it is a cheap alternative to sms loans if you repay what you have borrowed within a short period of time, but if you pay off the repayment period it will be very expensive instead.

Another reason may be that fast-mortgage companies are well aware that the industry will probably be regulated a little further in the future. Yes, there is a government inquiry into this. If the investigation introduces a relatively low interest rate ceiling, it will not be possible to lend type USD 1000 for 30 days and make a sufficiently good profit on it, but with longer maturities and slightly higher amounts, it works. Then you can lend USD 3000 or 5000 and upwards at a lower interest rate, just as some lenders already do, such as Money2You and LetMoney. And in this situation, it will certainly work well to offer online credits as well, although interest rates may need to be lowered further.

SMS loans are adjusted according to Google’s guidelines

There is also a third reason (probably the biggest reason) why credit card companies are starting to change their maturities are Google’s new guidelines for sms. Because it is no longer allowed to advertise loans that have a shorter term than 61 days at Google.

We at Snapmoney Finance believe that this is only positive because we would like to see the maturities become longer so that people can pay back their sms on time. Now only interest rates need to be lowered to a decent level.

Goodlink Finance’s new flexible loan – bad or good?

Goodlink Finances has also changed his product. Instead of offering sms loans with a maximum maturity of 30 days (with the possibility of extension), they have made their loan more flexible. Now you can pay off the loan for a significantly longer time, only you pay at least 3% of the loan each month. It is both good and bad:

• The good thing is that you do not need to apply for an extension after 1 month if you know from the beginning that you will not repay it after such a short time.
• What is bad is the ridiculously low repayment requirement of 3%, because if you pay off on a fast loan at such a slow rate it will be horribly expensive. Goodlink Finances himself shows on his website that if you borrow USD 5,000 and repay the loan for as long as possible, the total amount will be USD 32,992! It’s absurd. But sure, if you pay back USD 5000 within a month, it will cost you no more than USD 0 if you are a new customer, and only USD 750 if you pay after 2 months. It’s not so bad after all.

Now it remains to be seen if Goodlink Finances will also offer a minimum maturity of 61 days in the near future. And if a cost ceiling is guaranteed, they will be able to change their low amortization requirement.