What is business credit?
Business credit is a general term for credit or financing provided to a company. It can be used for stock, working capital, equipment, growth or temporary liquidity needs.
The term itself does not define how the financing works. Business credit can be a fixed-term loan, but it can also be a flexible credit line.
If you need a fixed amount, a business loan can be one option.
What types of business credit are there?
Business credit can take several forms:
- Business loan with a fixed amount
- Cash credit or another revolving credit line
- Investment financing
- Short-term working capital financing
The right form depends on the financing need of the business.
Business credit or cash credit?
Business credit is the broader category covering different types of credit for companies.
Cash credit is a specific form of business credit where a company can draw funds flexibly up to an agreed limit.
To learn more about how this type of facility works, see our page on cash credit.
Business credit or business loan?
A business loan is one form of business financing. A fixed amount is paid out and repaid according to the terms of the loan.
A credit line works differently: the company can usually draw and repay funds within an agreed limit.
The better option mainly depends on whether you need a fixed amount or ongoing access to liquidity.
What can business credit be used for?
Businesses use financing for purposes such as:
- Stock and purchasing
- Working capital
- Machinery and equipment
- Marketing and growth
- Renovation or expansion
- Temporary cash-flow gaps
For larger planned purchases, investment credit may be a better fit.
Applying for and comparing business credit
Before applying, it is important to define how much financing the business needs and what it will be used for.
What do lenders look at?
Assessment criteria vary by provider, but lenders often consider:
- The financial position of the business
- Revenue and cash flow
- The age and trading history of the company
- The amount requested
- The purpose of the financing
- Ability to repay
Terms, collateral requirements and documentation can also vary between lenders.
Calculating business credit
When comparing financing, do not look only at the amount borrowed. Consider the total cost, term and monthly obligations as well.
For an indication of a business loan, use the business loan calculator.
Interest and cost of business credit
The price depends on the type of financing and the provider. A traditional credit line may, for example, charge interest on the amount used, potentially with additional fees.
Other financing structures may be priced differently.
Read more about business loan interest rates and always compare the total cost rather than only the headline rate.
Business credit for startups
New businesses may also need financing, but available options depend heavily on the situation of the company and the lender's criteria.
Because a young business has less financial history, it may be assessed differently from a company that has been operating for several years.
Business credit for temporary liquidity needs
If the need is mainly temporary, for example because suppliers must be paid before customers pay their invoices, a flexible credit facility may be relevant.
If you know the amount needed in advance, a fixed business loan can be easier to compare.
Business credit and Qred
Qred does not offer a traditional revolving business credit line or cash credit facility. Qred offers business loans for companies that need a fixed amount.
A business loan can be used for working capital, stock, unexpected costs or investments.
Qred can offer business loans up to €500,000 with fixed monthly fees and the option to repay early without extra fees.
How an application with Qred works
1. Enter your financing need
Choose the amount your business needs and provide the requested company information.
2. Qred assesses the business
The application is assessed individually based on the financial situation of the company.
3. Review the offer
If Qred can make an offer, you will see the amount, fixed monthly fees and terms.
4. Decide whether the financing fits
Compare the offer with other options and look at total cost, term and impact on cash flow.
When can refinancing be more relevant?
If you already have one or more existing loans and want to replace or consolidate them, the need is more closely related to refinancing than new business credit.
Frequently asked questions about business credit
What is business credit?
Business credit is a broad term for credit or financing provided to a company for business purposes.
Is business credit the same as cash credit?
No. Cash credit is a specific form of business credit with a limit that the company can draw from flexibly.
Is business credit the same as a business loan?
Not always. A business loan is one form of business financing, while business credit can also include other types of credit.
How do you apply for business credit?
The process varies by provider. Usually you provide the amount required, company details and financial information before the lender assesses the business.
How much does business credit cost?
That depends on the type of financing, provider and financial situation of the business. Always compare total cost and terms.
Does Qred offer business credit?
Qred does not offer a traditional revolving business credit line. Qred offers business loans that can be used for a wide range of financing needs.
