Table of Contents
Different investments and entrepreneurial plans require different types of financing. Deciding on the most suitable financing option for a company often depends on a wide array of factors.(Get Loans for Small and Medium-Sized Enterprises)
1 Financing Options
I need a loan for my company.
Do you need funds to turn a business idea into reality or to expand your operations?(Get Loans for Small and Medium-Sized Enterprises)
In the search for additional entrepreneurial flexibility, it is well worth reviewing all your possible financing options. Equity capital and debt capital are two of the traditional forms of financing. Alternatively, you might use capital goods leasing and hybrid (mezzanine) financing instruments. A bank loan is just one of many ways to borrow funds. A capital base and steady performance in line with corporate risk offers you the flexibility you need.
There is a perfect financing package for every investment project, every business model and every company phase. Credit Suisse is here to help with tailored financing solutions that can make your company’s dreams come true.
What’s the best form of financing for me?
Operating Loan – Operating loans are a flexible solution for occasional financing needs or to bridge any seasonal liquidity gaps: We can offer a current account credit or a fixed advance to help you put your company’s plans into action. They can finance current assets and include a made-to-measure credit limit that you can use as needed. Interest is charged only on the portion of the loan you actually draw on. Operating loans provide immediate liquidity, and there’s no need to sell any of your assets.(Get Loans for Small and Medium-Sized Enterprises)
Investment Loan – Generally, a fixed amount is needed to finance equipment and current assets (such as machinery, vehicles, fixtures, etc.) An investment loan can help you make the purchases you need. It is provided as a fixed advance. Repayment is made on the due date.
Project Financing – Major projects like corporate acquisitions, management buyouts or purchasing assets on the capital market fall under project financing. Thanks to its vast experience, Credit Suisse is able to offer you a team of experts that work with you to create a custom solution that meets your situation.
The four phases of the credit process.
- Loan Application – Compile the information needed for the loan application. Be sure to talk with your relationship manager as early as possible.
- Credit Analysis – Credit Suisse reviews and evaluates the creditworthiness and solvency of your company along with the quality of any collateral. These provide the basis for a risk assessment and the terms of your loan.
- Borrowing Costs – Risk class, loan type, any collateral and the overall relationship of your company with Credit Suisse are all factors that influence your borrowing costs.(Get Loans for Small and Medium-Sized Enterprises)
- Credit Relationship – Credit relationships change continually, due to periodic repayments, extensions of loans due for repayment, as well as adjustment of interest and other terms. At the same time, Credit Suisse regularly reviews the risk assessment of the credit relationship.
2 Loan Application
Talking to my relationship manager.
Information – In order for Credit Suisse to evaluate your loan application, it needs information about your company. The “Loan application for corporate clients” is primarily meant to ensure that the bank has all the information it needs. It helps process your loan application faster and more efficiently. The loan application also lists a number of documents that you must attach. For instance, you’ll need the balance sheets and income statements from the last three years,
auditors’ reports if legally required and information about your collateral. It is also a good idea for newly incorporated
companies, acquisitions and other special financing situations to produce a business plan that demonstrates the business model’s potential for success.
Transparency for both parties.
The “Loan application for corporate clients” is not only for the relationship manager’s information. It is also meant to simplify your loan application and draw your attention to some questions and points you might not have otherwise considered.
Be open and honest when you meet with your relationship manager Granting a loan is largely based on trust. If you impair this trust from the first contact, it will be difficult further down the line to restore your credibility. Speak up if you don’t know the answer to something, and discuss even the facts that you feel are “negative.” The relationship manager will make every effort to provide your company with a loan.(Get Loans for Small and Medium-Sized Enterprises)
If you are planning major projects, it’s advisable to draw up a business plan. It will help you formulate your corporate goals and to consider the best way to reach them. The bank, for its part, uses well-founded business plans to obtain structured information necessary to make the lending decision.(Get Loans for Small and Medium-Sized Enterprises)
How your relationship manager assists with your loan application:-
He or she
- Is your direct point of contact for all banking issues
- Answers questions about your loan application
- Will hold the credit meeting with you
- Will visit your company if needed
- Will represent you to the credit specialist
- Will inform you of the credit decision
- Will explain the risk assessment
- Will offer alternatives
- Is open to comments and suggestions
Information sought for the loan application.
Company – All factual and legal information such as address, legal form, ownership and liability situation, auditors, etc.
Managers or Owners – Name, education, professional development, marital status, banking relationship, deputies, etc.
Company Profile – Employees, industry, activities, competition, suppliers, clients, etc.
Credit – Amount, financing purpose, amortization plan, third-party liabilities, etc.
3 Credit Risk: Part of Credit Analysis
The loan is allocated to a risk class.
Basis – Loans with comparable risks are placed into the same risk class. A risk class (or rating) shows the expected probability of default. Depending on the risk class, the credit specialist will make a credit decision, whereby collateral has an impact on the allocation to a specific class. If there is a high or very high risk (credit and interest might not be paid back), Credit Suisse will suggest ways to change the underlying conditions. For instance, changing the loan amount might help you get approved. On the other hand a positive decision may be subject to conditions, such as that the borrower may have to handle all of its account transactions via Credit Suisse.
The risk class system provides a clear picture.
Based on the individual analysis, Credit Suisse allocates all loans to risk classes. This serves a number of purposes: First, credit decisions can be made on a uniform basis and, second, this system makes it easier to determine deadlines for re-evaluating an open loan. These periodic re-evaluations also determine whether the risk class of a loan still meets the current assessment.(Get Loans for Small and Medium-Sized Enterprises)
Allocation of a loan to a risk class is done by the credit specialist. He or she uses knowledge obtained from the credit analysis regarding creditworthiness and solvency of the borrower and any collateral.
Risk – the bank’s business.
Taking risks is part of a bank’s business, which means proceeding with caution is essential. Below you will find an overview of Credit Suisse’s risk classes. Classification into risk classes CR14 and higher generally means no new credit will be granted. For medium risks the forecast must also be stable or positive.
Additional restrictions may be necessary due to portfolio issues. This means: Generally, to avoid excessively high risks, Credit Suisse actively manages its credit portfolio. It aims to broadly diversify its loans by industry, region, company size and risk class.(Get Loans for Small and Medium-Sized Enterprises)
4 Borrowing Costs
How much will my loan cost?
Price – The loan you applied for has been approved. But like all products and services, loans come at a price: interest that depends on the loan amount, term, risk class, client relationship and market conditions. Additionally, for each application, regardless of the amount, there is time and processing involved which is compensated for with fees
and charges; commission is also charged for current account credit. In other words, the costs of a loan are based on a price model, with some components reflecting your company’s particular situation.
The bank’s costs.
The price of your loan consists of interest and fees. But loans also mean costs and commissions for the bank. For instance, equity costs, meaning the interest of the legally prescribed equity component that must cover each loan. Or refinancing costs, meaning the interest that the bank has to pay for obtaining the money it lends. The risk costs account for any interest and credit that may be lost through the respective financing. They depend on the creditworthiness of the borrower, also taking any collateral into account. There are also operating expenses for staff and infrastructure. However, Credit Suisse does not simply add up each cost factor. It also considers the market situation and existing client relationship – allowing for differentiated and individual pricing.(Get Loans for Small and Medium-Sized Enterprises)