Investing in Your Business: How to Get the Right Loan

Investing in a business, whether to open a new company or expand an existing one, is an important decision.

Having access to additional capital can be the difference between planned growth and stagnation.

Today, several loan options are available on the Brazilian market for entrepreneurs, from specific lines of credit to financing modalities, each with its own requirements, rates, terms and advantages.

1. Traditional Business Loan

What is it:
Traditional business loans are lines of credit offered by banks to companies of different sizes. This type of loan is versatile and can be used for a variety of purposes, such as purchasing inventory, acquiring equipment, renovating facilities or expanding operations.

Interest Rates:
Rates vary depending on the bank and the company's credit profile, generally ranging from 2% to 6% per month. Institutions such as Banco do Brasil, Caixa Econômica Federal, Itaú and Santander offer this line of credit with conditions that vary depending on the company's time on the market and revenue.

Requirements:

• Minimum operating time (generally at least 1 year).
• Updated accounting documentation.
• Business plan to justify the use of credit.
• Guarantees in some cases, especially for higher amounts.

Values and Deadlines:
The amounts depend on the company's revenue and payment capacity, and can range from R$10,000 to millions of reais. The terms generally vary from 12 to 60 months, with grace periods in some cases.

Advantages and Disadvantages:
Advantages:

• Flexibility of use.
• Moderate rates compared to personal lines of credit.

Disadvantages:

• Requires minimum operating time.
• You may require guarantees, depending on the amount requested.

2. Home Equity Loan for Businesses

What is it:
A secured loan is a type of loan where the entrepreneur offers a property or other valuable asset as collateral for the loan. Also known as “home equity,” it allows access to higher amounts and better payment conditions.

Interest Rates:
Due to the guarantee offered, interest rates are lower, ranging from 0.8% to 1.5% per month. Institutions such as Bradesco, Itaú and fintech Creditas are some of those that offer this modality.

Requirements:

• Documentation of ownership of the property placed as collateral.
• Valuation of the property or asset to determine the financeable value (generally up to 60% of the market value).
• Credit usage plan.

Values and Deadlines:
The amounts can be quite high, ranging from R$50,000 to amounts exceeding R$1 million, depending on the value of the asset offered as collateral. The terms can be up to 180 months (15 years), providing smaller installments.

Advantages and Disadvantages:
Advantages:

• Lower interest rates and long terms.
• Access to high values for robust projects.

Disadvantages:

• Risk of loss of the asset in case of default.
• It requires evaluation and greater bureaucracy in the process.

3. BNDES Financing for Small and Medium-sized Enterprises

What is it:
The National Bank for Economic and Social Development (BNDES) offers specific financing lines for small and medium-sized companies. This modality is aimed at investments in expansion, modernization and acquisition of machinery and equipment.

Interest Rates:
BNDES interest rates vary according to the specific program, but are generally lower than those charged by private banks, averaging 1% to 4% per month.

Requirements:

• Registered and regularized company.
• Specific investment project (expansion, purchase of machinery, etc.).
• Financial and tax documentation.

Values and Deadlines:
Financing amounts vary depending on the project and may exceed R$1 million in specific cases. The terms are extensive and can reach up to 240 months (20 years) for large-scale projects.

Advantages and Disadvantages:
Advantages:

• Lower interest rates.
• Long terms, ideal for large investments.

Disadvantages:

• Rigorous and lengthy approval process.
• Requires detailed documentation and a specific business plan.

4. Fintech Loans for Working Capital

What is it:
Fintechs have brought fast and less bureaucratic solutions to the credit market. Companies such as Creditas, Nexoos and BizCapital offer quick loans aimed at working capital, helping companies maintain their operations without obstacles.

Interest Rates:
Rates vary greatly depending on the fintech and the company profile, but on average they are between 1.9% and 5% per month.

Requirements:

• Registration on the fintech platform.
• Basic company documentation.
• Information about billing and financial history.

Values and Deadlines:
Amounts usually range from R$5,000 to R$500,000, with payment terms between 6 and 24 months. Approval is fast, and can occur in up to 48 hours.

Advantages and Disadvantages:
Advantages:

• Agile process without much bureaucracy.
• Ideal solution for companies that need quick working capital.

Disadvantages:

• Fees may be higher than at traditional banks.
• Shorter payment terms.

5. Microcredit for Small Businesses

What is it:
Microcredit is a type of loan aimed at small entrepreneurs and informal businesses. It is offered by financial institutions, credit unions and some fintechs.

Interest Rates:
Rates vary depending on the institution, generally between 2% and 4% per month, and are affordable for small entrepreneurs.

Requirements:

• Proof of entrepreneurial activity (even informal).
• Personal and business documentation (if applicable).
• Limited credit amount (normally up to R$ 20,000).

Values and Deadlines:
The amounts vary from R$1,000 to R$20,000, depending on the institution and the entrepreneur's profile. The terms are usually short, from 6 to 18 months.

Advantages and Disadvantages:
Advantages:

• Easy access for small entrepreneurs.
• Affordable rates and less bureaucracy.

Disadvantages:

• Limited values, ideal for small projects.
• Shorter terms, which increases the value of the installments.

6. Loan for Business Expansion

What is it:
This type of loan is designed for expanding established businesses, whether by opening new units, renovating commercial spaces or expanding operations. It is offered by large banks and credit unions.

Interest Rates:
Rates vary depending on the amount requested and the customer profile, with an average of 1.5% to 4% per month.

Requirements:

• Minimum operating time (typically 2 years).
• Revenue history and growth forecast.
• Detailed expansion plan.

Values and Deadlines:
The amounts are generally high, ranging from R$ 50,000 to R$ 1 million or more, with terms of up to 10 years.

Advantages and Disadvantages:
Advantages:

• Focused on commercial expansion.
• Competitive rates and long terms.

Disadvantages:

• Requires solid financial history.
• Analysis process can be longer and more thorough.

Conclusion: Choosing the Right Loan to Invest in Your Business

Investing in a business is a strategic decision and requires choosing the type of financing that best aligns with your objectives and the profile of your business.

When deciding between options, consider the amount needed, the interest rate, and the repayment term.

Carrying out a simulation and comparing different options is essential to ensure an informed and advantageous decision.

With the right credit, you can boost the growth of your business, whether it is small, medium or large.