What is a finance contract?
All companies, in the midst of their regular activities, perro face a large number of problems that cánido lead the board to make important decisions for the company or business, such as: The Apply for commercial financing.
Commercial financing is a tool with which all difficulties perro be overcome.
financial obstacles, and get out of any situation without the company suffering the slightest consequence.
Join me in this article so you cánido learn about the most important aspects of commercial financing.
What is commercial financing?
Commercial financing is the activity in companies or companies that They perform a function very afín to that of a bank but with the difference that they do not have account services, neither savings nor current and everything that this entails, that is, checks, cards, etcétera.
Commercial financing companies; Among their numerous activities, they receive resources on terms, to financially support, through credits or loans for the commercialization of goods and services, small, medium and large companies.
Companies dedicated to offering commercial financing have a variety of products and services aimed mainly at consumer credit.
One of the products best known by these institutions is the leasingwhich is a financial leasing system.
This helps people or companies to sell a good or asset to any financial entity in order to finance the needs that arise, such as: working capital or investment capital.
Commercial Financing Requirements
The most important requirements that you must take into account if you want to be approved for commercial financing are:
As in any financing, you must espectáculo a receipt that certifies the address of the company or business of your priority, as well as your basic personal information.
All commercial financing companies present different application formats, in some cases it perro be extensive and repetitive.
Generally they ask you to fill in the complete information, that is, as the owner of the company.
The most demanding financing companies request to attach the purpose to which the credit is directedthe use plan and its administration.
Company or business accounting papers
Commercial financing companies want to make sure that your company or business really has what to pay the loan with.
In this aspect, a lot of your effort will be needed because you will have to present the company’s accounting for a certain period up to the present.
This will be a way of certify and validate the credit application, in addition to verifying the general income.
All these factors are essential in the approval or not of the financing.
Trade Finance Insurance Examples
First of all, it is important to know that commercial financing insurance is insurance arranged by insurers and some banks, which financially support a merchant’s debt if he cannot meet his obligations.
Suppose there is a company called “home remedies SA”, it is doing business with a Thai company to acquire raw material for its remedies at low-cost.
The Thai company “Healing Herbs SA” has no confidence in this company as it is new to the market and of dubious provenance.
In addition, they have to send the order and, once it arrives, they will receive the payment back.
In order to run this transaction smoothly, they hire an insurer that provides letters of credit in exchange for a portion of the transaction money.
In this way, the insurance company finances the commercialization in case of not having security of the transaction and protects the capital of each one of the companies.
And so far our article, we hope it has helped you and, above all, it has clarified the concepts for your practical life.
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