Most likely, most of you guess what a credit line is, but hardly anyone knows what laws govern this financial product. The basis for receiving a credit line is the successful completion of the entire credit procedure and finally the signing of the contract with the bank.
Credit line what is it?
A credit line is a type of revolving loan that is granted as part of a working bank account. It has the form of a limit that the borrower can borrow and is set automatically or at the customer’s request. Its amount is set individually and depends on the amount of inflows that go to the account.
The main advantage of the credit line is its renewal – the customer has the option of repeated use of the funds allocated by the bank, because each payment to the account automatically reduces the debt.
Renewal of the credit line usually takes place automatically, which is specified in the loan agreement. What’s more, the funds used within the limit can be used for any purpose in which the bank does not interfere.
Credit lines are very popular not only among individual clients, but also among entrepreneurs. The credit line for companies operates on similar principles as that established on a private bank account, with the difference that the limit amount in the case of business may be larger.
Credit line and debit
The credit line in your account is often mistaken for a debit limit. The fact is that both products belong to the catalog of credit products, and the mechanism of action in both cases is almost identical, but the difference is that the credit line allows access to higher amounts (up to PLN 150,000 for individual customers).
In addition, a revolving credit line is associated with more formalities. To be able to use this product, you must sign a separate loan agreement (or an annex to the one that is already there), which usually lasts for 12 months. After this time, it is automatically extended, unless the customer terminates it earlier.
Credit line without a bank
An alternative to the above products is a non-bank credit line, which is an offer of parabanks and private loan companies. For obvious reasons, the non-bank line is not assigned to the current account (non-bank institutions cannot keep individual savings and settlement accounts), and the previously specified limit is paid to the account specified by the client, depending on the demand.
The contract is usually signed for a period of no more than 4 months, and after the contract is completed, the entire debt must be repaid. A credit line without a bank usually has a much lower limit – on the market you can find an offer with a limit of up to PLN 5,000, granted for 4 months, and an offer with PLN 40,000, granted for 60 months.
However, it should be remembered that the costs of a non-bank credit line are much higher than in the case of a traditional revolving loan granted by a bank.
Business credit line
An open credit line is often the only chance to maintain financial liquidity in an enterprise. A company that wants to apply for a revolving loan must have a current account in a given bank for a minimum of 3 months. This criterion depends on the offer of a particular bank, however, most of them are treated as a necessary condition.
An entrepreneur, when applying for a credit line, usually does not need to submit certificates of non-arrears with the Social Insurance Institution or the Tax Office, and the history of company bank accounts from the last six months and the annual tax return are often enough for the initial decision. OutBank, Medial bank and SYBank have such a product in their offer.
OUT credit line
OutBank has in its offer credit products a credit line for companies. companies with one of the following legal forms may apply for it:
- a natural person conducting business activity individually,
- civil law partnership of natural persons
- general partnership of natural persons
- partnership of natural persons,
- court bailiff.
At the same time, a company may not settle accounts in the form of full accounting in the past or this year. The product is available to those entrepreneurs who have an account in any bank for a minimum of 6 months or, in the case of unsecured offers, for a minimum of 12 months.
You can submit an application for a credit line online, by phone or chat with a bank advisor, or by going to the nearest bank branch.
SYBank credit line
A revolving loan at SYBank can be obtained by entrepreneurs who have been on the market for more than 12 months, have a current account in the bank in Polish currency, their business activity is active and has not been suspended, and the economic and financial situation allows for taking the loan and its term repayment.
In such a situation, they can apply for a limit of up to PLN 500,000 by submitting an application online, at a selected outlet or by contacting a consultant by phone.
The flexible SYBank credit line allows you to secure a loan in the form of a credit line with a mortgage on the property (mortgage credit line) or with a de minimis guarantee of Gomez Bank
A mortgage credit line can be granted for up to 20 years, and funds paid from a secured credit line can only be used for purposes related to business operations (purchase of real estate, repayment of liabilities, refinancing of investment expenses, financing of current operations, etc.).
Credit limit for Medial bank companies
Medial bank allows entrepreneurs to receive a credit limit of up to PLN 500,000 without collateral, provided that they operate for a minimum of 12 months.
In this case, the loan agreement is signed for 12 months, and if the limit is repaid correctly, it can be renewed for another year. An entrepreneur who runs a one-man business by launching a credit limit in the package will also receive an innovative Idea Cloud company account.
The invoice, in addition to traditional functionalities, has a number of extras facilitating company management (e.g. a program for issuing VAT invoices, a virtual safe or cash flow forecasting).
As you can see, every bank is trying to smuggle credit products wherever possible. In addition to traditional loans, the customer can use a debit, credit line or credit cards. All these products for the bank are a guarantee of steady earnings and if we use them wisely, they can also serve us.