What are the Requirements of a Bank Loan and how can I obtain one through Raising Lines of Credit?

Businesses looking to obtain a business loan or line of credit via traditional lenders, such as banks are finding it increasingly difficult. There are multiple reasons to why, however in this blog we are going to explain how to successfully gain access to a loan and what the requirements are, via raising a line of credit.  

Bank Loan Requirements 

First off you must have a trading history with your bank. Your company and directors must pass due diligence and you must have a decent business plan with a strong exit strategy. Bluntly put, you must show you can repay any loans on time. 

In addition to the above, your bank will be looking for security. What security are you offering to give the bank comfort? These days everything under the sun including your personal guarantee. Do you want to give out a personal guarantee? Of course not.  

Say you pass all the above criteria, and the bank still rejects your proposal. What next? Well, there is access to third-party lenders. They will grant you a loan or a line of credit, which could be a way for your business to gain access to credit.  

Lines of Credit and Bank Loans 

Gaining access to a line of credit as a result of passing all the banks requirements, means you can obtain loans for different parts of your business, such as, day to day running costs, including salaries, expansion, new deals and so on. 

However, as mentioned before, banks are not lending as easily as once before. They have reduced their loan books for more profitable transactions. So, what do you do now? You change your security to a Demand Bank Guarantee. This is then offered to a third-party lender as security for a line of credit. 

Third-Party Lenders 

Third-party lenders will subject you to the same due diligence as banks. However, they will lend against a Demand Bank Guarantee. This is the only bank guarantee that can be monetised. Why? It has precise and explicit verbiage used for monetisation only. It is governed by ICC Uniform Rules for Demand Guarantees, (URDG 758). 

Who are Third-Party Lenders and how do I find them? 

Known as Providers, third-party lenders are typically Hedge Funds, Sovereign Wealth Funds, Private Equity Funds. Accessing Providers and Demand Bank Guarantees isn’t too challenging and companies looking to access a credit line, should enquire at IntaCapital Swiss – a boutique swiss finance company. They have provided access to credit lines for over a decade. 

IntaCapital Swiss have a unique financial product, “The Collateral Transfer Facility” – this facility provides access to Providers and Demand Bank Guarantees. This is perfect for those who have previously been denied a credit line by their bank. 

For further information, utilise our blogs or get in touch to ask tailored questions.