Monthly Archives: February 2019

Short-term loans: what are they? Duration and various types

Short-term loans are provided by ordinary credit institutions in the form of cash or signature credits.

Short-term loans are provided by ordinary credit institutions in the form of cash or signature credits.

These are banking transactions whose contractual deadlines must not exceed 18 months . Also the so-called revocable bank loans, or those granted with an undetermined maturity but on which the bank reserves the right to request the repayment of the sums paid out, are included among short-term loans.

With short-term financing with cash credit, the banks provide the customer with a set amount of money. Cash receivables include the current account overdraft, the discount on the commercial portfolio and the advance on invoices and bank receipts.

The current account overdraft is a short-term loan with which the bank makes available to the customer a precise sum on a current account. The accredited person can use the credit multiple times but must maintain a balance between withdrawals and remittances. The credit facility granted may be uncovered, or without guarantee, or guaranteed, or granted against a specific personal guarantee (surety, pledge, mortgage).

The current account overdraft is one of the most used short-term loans and consists in the possibility of using the amounts made available by the bank at any time and is clearly a very convenient credit line for companies.

The discount on the commercial portfolio is one of the short-term loans and consists in the conversion into money, or in the disinvestment of the credits connected to the performance of the activity which must however be incorporated in a document of a nature of a nature. This means that with the discount of the commercial portfolio the banks anticipate to the customer the amount of a credit to third parties not yet expired. The customer must then transfer the credit to the bank with the obligation, however, to repay the sum advanced in the event of the debtor’s insolvency .

Advances on invoices and bank receipts are a type of short-term loan that is granted upon presentation of the relevant documents. However, bank receipts and invoices are not like bills of credit instruments, but documents attesting to the existence of a credit and therefore the right to collect a precise sum.

Provided that the customer is considered reliable, the bank will then decide whether to grant the advance subject to collection on commercial invoices or bank receipts. It is a widespread operation, which has replaced the discount of bills and requires that the bank ascertain the economic and financial conditions of the company before crediting the sum corresponding to the value of the documents presented.

Loans with guarantor without payroll and bad payers

Loans with guarantor are a form of subsidized financing, aimed especially at those who cannot demonstrate consolidated income to the bank.

 Loans with guarantor are a form of subsidized financing, aimed especially at those who cannot demonstrate consolidated income to the bank.

When a financial institution is preparing to provide a loan, in fact, one of the first actions it performs is the control over the economic solidity of the applicant. For this reason, the loan request must always be accompanied by documents certifying your financial situation: usually, the last pay packet is required, which shows a constant revenue stream, and the unique 730 model, which instead certifies the status general of our finances. For this reason, it is easier for an employee to access a loan than a freelancer or who can only enjoy occasional jobs.

The help from a guarantor can facilitate access to credit even those who do not present a pay slip to the bank. This figure supports the debtor and, if the latter fails to pay the installments, intervenes, replacing it. If the guarantor can demonstrate a satisfactory income for the bank’s needs, this can certainly help the first applicant to obtain more favorable terms. But we must remember that a mere guarantor might not be enough to get the loan, but other guarantees could be required.

Despite its usefulness, it is necessary to carefully describe the functions required of the guarantor and the risks he takes on by accepting this role. First of all, the guarantor’s intervention must only be extraordinary: his support is required if the debtor is unable to pay an installment, thus starting the bank’s request to the guarantor. However, the guarantor should not be expected to completely replace the debtor: indeed, in a normal situation, the guarantor should not even be called to actively participate in the repayment of the loan.

Are there risks to the guarantor ? If the debtor does not pay, the guarantor is in any case obliged to replace it. If he did not do so, he would risk being himself reported to the Central Risks as a bad payer , thus jeopardizing his chances of obtaining a loan in the future. For this reason, if you agree to participate in loans with guarantor, it is important to be constantly informed about the status of the repayment and the repayment plan, so as to avoid unpleasant surprises. Finally, if you are a guarantor of a loan, this in any case affects your economic capacity: this means that if a loan is required, the mere fact of covering this role could push the bank to ask for more information on your economic situation.