Many activities need resources to start. These are necessary to buy the necessary equipment, hire employees or other initial investments that will enable the first steps of the new company. A lot of entrepreneurs reach for grants, but there will not always be ones that will cover all financial needs. In this situation, you need a loan. But what to do if the bank does not want to offer a loan to a novice company? In this situation, it is worth reaching for a loan with a de minimis guarantee.
What is a de minimis loan?
This loan is directed to micro, small and medium-sized enterprises. It was created as a result of an agreement between Lite Bank and commercial banks.
How it’s working? Lite Bank assumes responsibility for repayment of liabilities in the event of the entrepreneur losing financial liquidity.
What are the benefits?
This form of support for entrepreneurs has many benefits. This is an excellent financing method for young companies that usually do not have adequate assets to secure the loan. The loan covered by the de minimis guarantee assumes that the entrepreneur does not have to set up his assets for Lite Bank or the bank that grants the loan.
How it’s working?
The entrepreneur, using a de minimis guarantee, can secure a maximum of 60% of the loan amount – up to USD 3.5 million. It is granted for 27 months in the case of a revolving loan and 99 months for an investment loan. The commission rate is 0.5% of the guarantee amount per annum.
What can you spend the money on?
The funds from the revolving loan secured by the de minimis guarantee can be allocated to such activities related to the company as: payment of invoices, settlement of taxes, financing the development of the enterprise, repayment of another revolving loan. However, the funds from the de mininis investment loan can be used to purchase machines, equipment or cars, as well as the construction and modernization of facilities that are related to business operations.
Who can benefit from a loan with a de minimis guarantee?
To apply for a loan with such collateral, a company must meet several criteria. The entrepreneur cannot have an entry that excludes him from the loan, e.g. in BIK. What’s more, a company applying for a de minimis guarantee must have all ZUS contributions paid. An entrepreneur may not have administrative enforcement proceedings or a terminated credit exposure at the Lending Bank within 3 months prior to submitting the guarantee application. It is also worth remembering that the value of de minimis aid for one entrepreneur cannot exceed USD 100,000 – 200,000 within 3 tax years.
Formalities at the crediting bank
After meeting all the conditions, you can go to the lending bank. The process of applying for a loan with a de minimis guarantee is no different from that of a regular loan. All formalities are handled by the crediting bank. The bank applies for a loan and a separate application for a de minimis guarantee.
It is worth using a de minimis loan if you want to develop your business and you do not have other options to obtain the necessary funds. Such help is excellent at the start, and by the way it does not have any tax consequences.
We recommend: A simple joint-stock company from March 1, 2021.
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