Which are the main criteria when choosing a bank?
You can evaluate the reliability of a bank by various parameters, such as shareholders, market presence, and financial performance which are provided in the yearly reports. The bank branch network, the number of clients, the amounts of deposits and credits are also important factors to be considered when choosing a bank.
Whenever you see an advertisement of a bank, it is important to see what is behind the conditions it describes. A responsible bank always informs its clients about the full prices of its services and also provides any important accompanying information about the product.
Time is money! You should be always considering this fact so you do not spend your time in futile actions and long waiting for the decision for your credit. The speed in provision of services indicates professionalism and speaks for the quality of the work processes in a bank.
Professionalism and quality
The competent bank employee always listens to you and is capable to answer any question of yours so they can choose the right product, especially for you. You can judge for the quality of service by how you feel at the bank.
Understandable banking products
The wide variety of banking services offered is often a way to attract customer’s attention. The most important factor when choosing a specific bank product is that you understand its specifics and main advantages compared to other similar products on the market.
Traditionally, the price/quality ratio is an important factor when choosing a bank. Be careful with implausible low interest rates on a loan or considerably high interest rate on savings accounts. As a rule of thumb, this means ‘’hidden’’ costs, fees, penalty interest rates, additional services and supplementary products. Make sure you know how much exactly a given service will cost you.
With your current account you will be able to make:
The main advantage of this account is that it gives you the opportunity to pay your commercial partners without carrying cash. Through the current account you can quickly pay amounts on invoices of your suppliers that are distant from your office or shop, even abroad. On your current account you can also receive funds from clients in the country and abroad. Many banks offer their customers the possibility to use their company account from different branches of the bank which is an additional convenience. It is good to check if your bank offers this service.
Most banks offer various ways to use your current account without visiting a branch.
With this service you can check the balance of your accounts or make payments remotely from home or from your office.
Through it you can check the balance of your accounts on the phone or receive information about various banking products. In some banks, transfers can be also made through phone banking.
With this service you receive SMS on your mobile phone whenever there are incoming or outgoing transfers on your account.
In some banks this is free of charge, in others – there is a flat fee and in yet another - a monthly fee applies. Check the price of the transfers if they are made through Internet or Phone Banking.
Since some liabilities are paid monthly – leasing rent, security, Internet etc., many banks offer the service of recurring monthly payments. With this service the bank undertakes to make the transfers you indicate while you do not need to fill in documents or visit branches. Many banks offer the service for monthly payments of utility bills of your company.
Pay your employees without wasting time
Often paying the employees takes considerable time of your accountants and cashiers. That is why many banks offer the Payroll service. With it the bank automatically transfers makes transfer of the salaries from your company account to the accounts of your employees with the need for you to carry cash and lose time for individual payments.
This service is also an advantage for your employees – this provides them with easier access to the loans offered by the bank. Usually the employees get a debit card allowing withdraws at ATMs, payments in shops or payment of utility bills etc.
Fees related to the ‘’Payroll’’ service
Most banks do not deduct a fee for transfer of salaries or if they do, it is a very small one. It is important that you check the fees that your employees will pay when for issuance and usage of their debit cards.
Usage of debit card
Some banks offer an option for a supplementary debit card to the current account of your company, allowing you to withdraw money from every ATM in the country or pay in shops, and gas stations without carrying cash. It is important to know that this card can be used for company purchases only so that your accountant can easily book afterward the expense.
Usually people relate deposits to personal savings. However, banks offer deposits to companies as well. If you have funds which you will not need for certain period, you can deposit them or transfer them to a deposit account where the interest is usually higher than those on a current account. Thus the money will be a source of additional income in the form of interest.
How to allocate the company funds?
The financial situation of the company, applying for a loan is one of the key factors for the bank to disburse it.
To estimate what amount you can pay monthly on your loan without going into a challenging situation, it is important to calculate the following:
|A (Income)||Amount||B (Expenses)||Amount|
|Sale of goods||Purchase of goods and materials|
|Income from rent||Salaries and social securities|
|Income from other companies||Transport expenses|
|Expenses for electricity, heating, phone etc.|
|Payments on loans & interest|
|Other expenses (such as insurance, repairs, accountant etc.)|
|Total Income (А):||Total Expenses (B):|
|Net revenue (А - B):|
Net revenue - Monthly expenses for owner’s allowance = Remaining amount of funds
The remaining sum is the amount that you can rely on and use to repay your company loan. It is recommendable that you do not use the entire remaining amount for instalments on a loan – it is good to set aside a part of it for unforeseen expenses and investments.
What kind of business loans do the banks offer?
Several main types of loans offered by the banks:
What is the difference between the “fixed” and “floating” interest rates?
The fixed interest rates are defined in the loan contract and remain unchanged for the entire period. The ‘’floating’’ (variable) interest rates are used most often for long-term credits. The floating rates are a combination of base interest rate plus and an addition to it. The addition is fixed while the base interest rate is changed on a certain period.
What raises the cost of your credit?
|Bank 1||Bank 2||Bank 3|
|Interest due for the whole period of the loan|
|Loan application processing fee|
|Evaluation, submission and approval of application|
|Possible fees upon disbursement of credit|
|Flat disbursement fee – paid upon disbursement of the loan, usually a percentage of the entire amount|
|Management and processing fee – could be a flat or yearly fee, usually a percentage of the loan amount or of the remaining part of the loan|
|Commitment fee – due with overdrafts and credit lines, calculated as a percentage of the authorized loan that is not used; usually – a monthly fee|
|Fees related to the collateral|
|notary fees on the mortgage facility|
|insurance of collateral|
|Fees, usually not taken into account|
- early repayment
- partial early repayment
- change of loan conditions