Business loan

What is a business loan?

With a business loan, you borrow a lump sum for your business and pay it back in monthly installments. Each payment covers part of the principal plus interest. You can borrow up to €500,000 and take up to 60 months to repay it.

Businesses often use one to:

• pay suppliers or cover a large purchase

• bridge the gap until customers pay

• invest in staff, equipment, or property

The loan comes from a lender that Nextfactor works with. Nextfactor forwards your application to the lender, who makes the decision and signs the contract with you.

When does a business loan make sense?

Two situations come up most often:

• Your bank won't extend more credit, and factoring isn't an option. That might be because you sell to consumers, or because your revenue is too low for a factoring agreement.

• You already use factoring and need additional funding. Factoring turns your invoices into cash. An investment or a large purchase sometimes calls for something else.

If factoring is an option for your business, we'll look at that first to see whether it's the better fit. Read more about how factoring works. If you sell to consumers, it's also worth looking into reverse factoring.

An example

This example is hypothetical. A painting company works mostly for homeowners. It lands a big job and has to pay for materials and the wages of two extra painters up front. Factoring isn't an option, and its line of credit at the bank is maxed out. A business loan carries the company through the months until the customer pays.

How do you apply for a business loan?

1. We look at your situation together. If factoring would suit your business better, we'll tell you.

2. You send us your numbers. That means your annual accounts, your bank statements for the past three months, and what the loan is for.

3. We forward your application to the lender. The lender reviews your file and makes the decision.

4. You sign the contract with the lender electronically. After that, the money is deposited into your account.

It can move quickly. Sometimes the money is in your account within a week.

What should you know before you sign?

A loan isn't something to take on lightly. Here are the upsides and the things to watch out for.

The upsides

• It can be fast. Sometimes within a week.

• There are no setup fees.

• You can always repay early. If your contract sets a minimum term, you'll still owe the interest for that period.

• You can combine it with factoring.

What to watch out for

• Interest is charged monthly. Over a full year, it adds up to more than you'd pay on a bank loan.

• As the owner, you personally guarantee the loan. If your business doesn't repay it, the lender can hold you personally responsible for the amount.

• You make a payment every month. Run the numbers beforehand to make sure your business can handle it, month after month.

• The lender decides. Applying doesn't guarantee you'll get a loan.

How much does a business loan cost?

You pay monthly interest on the outstanding balance. The rate depends on your business, your numbers, and the amount you borrow. There are no setup fees.

A business loan like this costs more than borrowing from your bank. The shorter the term, the less interest you pay. So use it for a specific purpose, not to cover an ongoing shortfall.

You'll find what Nextfactor charges for its advice in our terms of engagement.

Who qualifies for a business loan?

Here's what the lender mainly looks at:

• Your business is based and operating in Belgium. Sole proprietors and companies can both apply.

• You've completed at least one fiscal year. The lender looks at your results and at your bank transactions over the past few months.

• The amount is in line with your revenue. The higher your revenue, the more you can borrow.

If your bank said no, that doesn't mean every lender will. Each one looks at an application differently.