What Types of Business Loans Are There? An Overview for Entrepreneurs
Not all loans are the same – especially when it comes to business financing. Depending on the purpose and the company's situation, different models are suitable. This article provides an overview of the most common loans for businesses.
Investment Loan – for Machinery, Vehicles & More
The investment loan is ideal for long-term acquisitions. Typical use cases include:
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Purchase of machinery or production equipment
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Fleet expansion
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Digitalization projects
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Real estate for business use
Loan terms usually range between 5 and 10 years. Use the business loan calculator to estimate your monthly installment.
Working Capital Loan – for Short-Term Liquidity Needs
When liquidity bottlenecks threaten your operations, a working capital loan can help. Examples include:
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Pre-financing of orders
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Bridge financing for outstanding payments
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Bridging seasonal fluctuations
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Terms: a few months up to a maximum of 2 years
Tip: Pay attention to effective interest rates and additional costs (e.g., commitment fees).
Overdraft Facility – the Flexible Solution for Your Business Account
The overdraft facility works like a line of credit for business customers: you can overdraw your business account within an agreed limit.
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Ideal for short-term cash shortages
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High flexibility, but comparatively higher interest rates
Guarantee Credit – for Sureties and Guarantees
Does your company frequently require sureties (e.g., for construction projects)? Then a guarantee credit is the right solution.
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The bank issues a guarantee to third parties on your behalf
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You only pay a guarantee commission (no interest as with a loan)
Conclusion
Choosing the right business loan depends on the purpose and your financial structure. Use our business loan calculator to explore different scenarios and find the financing option that best suits your company.