Loan to business leaders: private loan or commercial loan?

Loan to business leaders: private loan or commercial loan?

Is it better to carry out the loan on your own in the name or under that of your company? Comparison of the two solutions.

Financing for business leaders

Do you run a business as a freelancer or director, and are you looking for money for yourself or for your business? What are the alternatives available to you.

Private or commercial loan

Business managers who want money can either borrow on their own behalf, or on behalf of their company. These are two different approaches with different approaches:

  • Ready in one’s own name: then we talk about private loan, or even consumer loan
  • Loan in the name of the company: we talk about commercial loan, see SME loan

Commercial loan

A priori, this type of loan makes it possible to finance any project or cash requirement related to the company . In some cases, however, especially for freelancers, the border may be more blurred. This would be for example the case of a company car also used in a private setting. Anyway, applying for a loan on behalf of your business involves:

  • That the borrowed money will be used in principle in the financing of his business
  • To be able to borrow higher amounts: from 10,000 Chf and up to 30,000 Chf
  • Choose the repayment term from 12 to 84 months
  • To benefit from a sometimes cheaper interest rate
  • Having to provide some extra documents for file analysis
  • Sometimes longer treatment time

For example, an SME loan of 200,000 Chf over 60 months with an interest rate of 4.8% implies a monthly payment of 3,767 Chf which includes depreciation and interest payments.

Consumer loan

Conversely, this type of loan concerns the financing of any private project. However, in the case of an independent or directly a small SME, nothing prevents to apply for a private loan and use the money obtained for his company ! In general, this type of solution involves:

  • Free use of the money obtained
  • Amounts borrowed in principle lower: from 3,000 to 300,000 Chf
  • Choose the repayment term from 12 to 84 months
  • An interest rate directly correlated to the applicant’s budget (a better situation implies a better rate)
  • Simplified procedures: fewer documents to provide, a faster decision

For example, a 60-month Chf 40,000 private loan with an interest rate of 5.8% implies a monthly payment of 766 Chf which includes amortization and interest payments.

Which solution to choose?

If in some cases it seems obvious to turn to one alternative over another, sometimes the choice is not so simple. The simplest solution may be to approach a specialist who is present in both private and commercial lending . Thus, loan-Bank offers solutions for business leaders in both forms. Calling on a specialist often makes it possible to benefit from an in-depth analysis of his situation and his needs, and to see more clearly about the advantages and disadvantages of this or that solution. Finally, it should also be noted that there are still other alternatives to commercial loan, such as leasing SMEs, which allows the financing of production assets, or factoring, which proves to be a solution to improve its inputs. in long-term liquidity.