A special place in the country’s economic system is occupied by the financial relationship between the lender and the borrower. Any credit report requires scrutiny and legislative regulation. After all, the financial policy of the whole country depends on how they proceed. Today, specialized agencies provide a huge number of loan programs, an important place of which is occupied by a business loan.


In any company, the process of increasing its working capital. Therefore, business loans are becoming increasingly popular today as one of the ways to equip the borrower with an organization and as a financial tool for attracting customers to sellers.

In fact, this form of loan is a deferred payment, and more specifically, a loan of money or goods issued to the borrower with the condition of repayment after a certain time. At the same time, legal entities are involved in the relationship of both parties. Business loan does not issue a bank. A borrower is an organization.

Any commercial contract may contain the principles of such a loan. As a result, the loan itself is issued for a short time with the fulfillment of the terms of urgency and payment.

Forms of business loan

To date, there are two forms:

  • Merchandise.
  • Monetary.

A commodity form is a process in which goods are lent that provide a return on debt. This type of historically preceded the form of money. The essence of commodity lending is the participation of assets in financial dealings as an object of debt. Return it with money. The loan assets become the property of the borrower only after full repayment of the debt.

Providing a cash commercial loan means that a certain amount is given to the loan. This is a classic shape. It is typical in relation to the value of money as the general equivalent of any financial transaction.

Business loan

The meaning of any type of loan is to pay back the money issued in debt. Based on this principle, all commercial banks operate. Loans can be made by non-bank borrowers. Then they talk about commercial credit. It can be used only if the seller has the funds in excess of the necessary reserve capital so that the economic process of production does not stop if the debtor delays the repayment of the debt.

There are the following ways to provide credit to commercial organizations.

  • Invoice – when the buyer receives the commodity and administrative documents after having made the acceptance.
  • An open account provides for the borrower’s demand for assets at any time without an additional decision on granting a loan.
  • Invoice means the issuance of a discount, subject to timely payment.
  • Franchising is a seasonal loan that allows you to borrow goods before special sales.

Shipping allows you to receive goods on credit with the condition of repayment of the debt after their sale. Most often, this method is called capture for implementation.


A commercial loan, like any other type of loan, has some positive aspects:

  • For the supplier-creditor, the provision of debt is accompanied by the direct sale of goods. Additionally, additional interest income is added to the profit.
  • It is easier for a borrower to use a commodity credit than it is to go to commercial banks for a cash loan.
  • Fast delivery of necessary goods.
  • Simple technical conditions.
  • It allows you to expand the range of products and, accordingly, accelerates the circulation of capital.
  • The distribution of unused material resources.
  • Expanding the level of opportunities of the organization in various directions of economic activity. This, respectively, accelerates the turnover of funds.
  • Mutual financial assistance and cooperation between organizations.
  • Participate in the development of the credit market.


On a par with a large number of merits, a business loan form has several disadvantages:

  • Restrictions on direction, size and times of operation.
  • Possible delays for the debtor due to the deterioration of the financial situation.
  • The existence of risk for the supplier.
  • A major impact of the banking sector when issuing invoices.
  • Slowdown of funds (with deferred payments).
  • When accounting bills of exchange by banking authorities, growth of monetary currency is possible.

Contract features

A commercial loan agreement is another independent agreement. It accompanies the main deal, such as a sale or lease. It turns out that in various documents containing information on the process of transferring money or property to the property of another party, commercial lending can be considered. In general, the condition of the loan in question can be contained both in the main agreement and in the form of an additional agreement.

The conditions in this case are regulated by civil acts. Thus, if it is stated that the main document must be drawn up strictly in writing, then the agreement on a commercial loan is drawn up in the same way.

For the actual conclusion of the agreement determine the types of business loans:

  • Full or partial advance payment.
  • Advance payment.
  • Delay.
  • Installment.

Main feature

Trade credit is an important financial instrument in the economic policy of the whole country and of a single organization. Its most important feature is that the parties to such a contract are only legal entities. In this case, the loan registration itself passes without the participation of banks.

According to the current legislation, the things that are allowed to participate in the loan in question are established. These include items that come with individual standard features. For example, a property or, conversely, things that have generic characteristics.

The size of the cost of the service is not regulated by law and is not set. The rate of a business loan is considered by the borrower independently and is adjusted at his discretion, by agreement of the parties. In order to somehow limit the claims of the supplier of goods in relation to the setting of the interest rate, there are some guidelines:

  • A loan for a borrower should be cheaper than with banks. Otherwise, it will be more profitable for him to take out a bank loan and thereby purchase the necessary property.
  • The loan fee is needed to keep the price of the goods competitive.
  • The loan payment must fully cover the costs of the lender, directly related to the granting of a delay on this payment.

Regarding the term of granting a business loan, as well as the interest rate, the legislation does not set limits and limits. In case of late payment, a fee is charged, similar to the principle of charging a fine. This is due to a few factors:

  • These regulatory instruments aim to discipline the debtor and to attract him to pay the loan.
  • In the event of a breach of the business loan agreement, both methods of recovery allow for further income.
  • In both cases, the fee is charged through the receipt of interest.

Credit invoice

An important role in trade credit primarily plays an account. It is one of the varieties of debt, issued in a strictly established form. The bill provides for repayment of the debt on time. It is an official document and requires you to fill in all the necessary details. The object of the account is cash only.

The basis of the billing transaction is a business loan. The loan is provided by one company to another institution, bypassing the banks. Today the account is a popular way of commercial lending. This is due to the fact that he, as an official document, is a mobile obligation.

In conclusion, it remains to be noted that trade credit today is constantly evolving and is very popular. This effect is due to the ease of processing and lower interest rates than bank loans.