As we have already mentioned in previous posts, the loans requested by companies can have very different purposes. But the ones that truly allow companies to grow and expand are investment loans, hence their importance.
For this reason we will try to explain the characteristics of investment loans. When a company needs to undertake a very important investment that has nothing to do with the operating activity, it always uses investment loans.
What are investments in a company for?
The final reason for the investments is to try to grow the company, and for this, investments of very different types are undertaken:
- For the purchase and opening of new stores.
- For the purchase of new machinery.
- To develop a new social activity in the company.
- For the geographical expansion of society.
- For research in R&D, etc …
Investment loans, characteristics
The fact that investment loans differ is because they have their own characteristics compared to other loans:
- Companies in expansion and growth.
- Highest investment amount.
- Highest term of the operation, generally up to a five-year limit in the case of investment loans in Good Finance
- Interest rate somewhat higher being at a higher term.
Investment loans in Good Finance
In Good Finance, 70% of the loan applications received are investment loans, compared to 30% for working capital. This information gives us the fact that crowdlending is also used for business expansion, opening new lines, purchase of machinery, facilities … and other investment projects.
Example of an investment loan
Suppose a bakery that has an open store. After increasing its market share, it decides to carry out a market study to open a second store in the other part of the city. This study presents results that advise the opening of this second location, since in the future when it is amortized it will guarantee more benefits.
The next step would be to apply for an investment loan for the purchase and works required by the premises. The market plan carried out considers that this place can give benefits from the third year of its opening, so they request a 4-year loan to have a more comfortable repayment capacity.