Investment loan – definition, functionality, provider

Companies need or want to invest in order to remain marketable. Investments, however, in most cases reach a volume that makes sense for financing, investment finance, either necessary or from a business perspective. Financing in the form of an investment loan definitely spares the capital resources of the companies.

What is an investment loan?

What is an investment loan?

With an investment loan, companies can finance fixed assets such as machinery, vehicles or means of production, but also real estate, in the medium or long term. The capital goods often serve as security as well.

You will find tailor-made financing offers especially for companies at Cimptons the finance portal for medium-sized companies:

  • Corporate loans up to 750,000 USD
  • Operating loan
  • factoring
  • Commercial real estate financing
  • Finance or lease machinery and vehicles

With and without state funding

With and without state funding

In investment finance, a distinction must be made between two approaches:

  • The classic financing without state funding
  • State-subsidized financing

External and internal financing

External and internal financing

For investment financing, both the different external financing and the internal financing are available:

External financing is becoming more important. Of the framework conditions, the investment loan, if it is funded by the state, is the most interesting option.

The classic investment loan without state funding

If there is no state funding from the Credit Staire or another state or promotional bank, then there is primarily only a classic investment loan to choose from. The bandwidth starts at 5,000 USD and is theoretically open to unlimited.

Capital goods, whether a computer system or a production line, are depreciated. The depreciation periods, in turn, are specified by the Federal Ministry of Finance (BMF) for the respective capital goods (1). But what has the depreciation period to do with financing?

As a rule, the financing period is based on the amortization period via so-called repayment financing. A calculation example for an investment volume of 20,000 USD, an annual interest rate of six percent and a depreciation period of five years:

The state-subsidized investment financing

The state-subsidized investment financing

The subsidized investment financing can have a variety of characteristics. Especially interesting for young companies is the variant in which up to 80 percent of the loan is covered by a state guarantee.

Particularly profitable are loans with subsidized interest or repayment in the first year. Using the example of L-Bank, the Landesbank Baden-Württemberg, we would like to point out a regional funding for investment financing.
Be promoted

  • Participation, acquisition or relocation of a company
  • Expansion, modernization, rationalization
  • Financing through subsidized promotional loans

Target groups for the promotion are small and medium-sized enterprises (SMEs), businesses and freelancers.

In addition to pure investments, investment costs are also promoted:

Business investments

  • Takeover of a company
  • Expansion, modernization, rationalization
  • relocation
  • Participation in a company

Eligible costs: investment costs

  • Land, buildings
  • construction work
  • Installations, machines, equipment, facilities, EDP
  • Takeover price for companies or company shares

An important criterion at L-Bank is regional orientation. For example, L-Bank requires the following for its investment loans:

“Investment location: rural areas –
The investment must be made in rural areas in Baden-Württemberg. For the rural area, all municipalities count among 50,000 inhabitants, in the districts Böblingen, Esslingen, Göppingen, Ludwigsburg and Rems-Murr with less than 30,000 inhabitants. “

The Intrasavings Bank promotion

The Intrasavings Bank promotion

Intrasavings Bank is available as a supraregional contact. The Frankfurt Institute offers different funding programs, geared to the respective investment project. For energy-efficient measures, separate financing is once again available.

The classic investment loan, Intrasavings Bank’s 044 funding program, is available to freelancers and innovative medium-sized companies that are involved in innovative segments. The company must exist for at least two years. 

  • investments
  • resources
  • warehouse

The minimum amount amounts to 25,000 USD, the maximum loan volume 7.5 million USD.

The investment loan for classic companies

The subsidized financing in Intrasavings Bank’s program 037, Intrasavings Bank Entrepreneur Loan, is much more comprehensive:
investments

  • Purchase of equipment
  • machinery
  • Land and buildings
  • building-costs
  • Furnishings
  • Commercial vehicles
  • Operating and office equipment
  • Intangible investments (licenses and patents)
  • Software and computer
  • Establishment and expansion of broadband networks

Operating resources (means for ensuring ongoing operation)

  • warehouse
  • Acquisition of assets from other companies, including acquisitions and active participations
  • leasing

Businesses and freelancers with a turnover of no more than 500 million USD per year are funded. The loans can be up to 25 million USD and cover 100 percent of the investment costs. Intrasavings Bank assumes a liability exemption of up to 50 percent of the loan amount.

Leasing

Leasing

Investment financing through leasing is the simplest option. The leasing contracts generally include a full-service service. This means that the lessee does not have to worry about maintenance or repair of the leased goods, as these tasks are contractually with the lessor. However, leasing only applies to production goods. Goods or raw materials can not be financed under a leasing contract.

The following table shows the areas in which leasing is predominantly used:

However, it always remains a calculating example for the individual company when leasing is worthwhile compared to an investment loan.

Lease offers from 1.99% especially for companies can be found at Cimptons the finance portal for SMEs.

Equity financing

Turning public-sector companies, freelancers and SMEs, into investment finance, barring shareholder loans or capital increases. Due to the size of the company and the company structure, they usually do not qualify for investment financing.

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